2016 (4) TMI 1236 - AT - Income Tax

Reopening of assessment - Held that - In this case, it was held that after 01/04/89, power to reopen is much wider but still, if the Assessing Officer is permitted to do reopening on mere change of opinion then it would give arbitrary power to Assessing Officer to reopen the assessment. From the facts of the present case, as discussed above, it is seen that the opinion was formed by the Assessing Officer in the course of original assessment proceedings completed u/s 143(3) of the Act and now, the reopening is on mere change of opinion because there is no reference to any new material and disallowance by the A.O. in a subsequent year is not a fresh material in itself unless such disallowance in a subsequent year is on the basis of a fresh material having relevance in the present year also. There is no such mention in the reasons recorded by the A.O. that the disallowance of the claim in A.Y. 2009 10 is on the basis of a fresh material having relevance in these two years also. Hence, the reopening is on mere change of opinion on same materials, which cannot be permitted - Decided in favour of assessee.

Summary

Issues:
Appeals filed by Revenue against CIT(A) orders for assessment years 2007-08 & 2008-09.

Analysis:
1. Issue 1 - Reopening of Assessment under Section 147 of the Income Tax Act 1961:
- The Revenue contended that CIT(A) erred in quashing the proceedings u/s 147 without fresh material, stating all conditions for reopening were met.
- CIT(A) observed the reasons recorded were a mere change of opinion, not considering the detection of undue deduction claim.
- CIT(A) relied on her own judgment for A.Y. 2009-10, which was under further appeal.
- The Revenue argued CIT(A) failed to adjudicate on additions made by the Assessing Officer.

2. Issue 2 - Merits of the Assessment Orders:
- The Revenue argued that CIT(A) did not address the various additions made by the Assessing Officer in the assessment orders.
- The Revenue sought vacating of CIT(A) order and restoration of the assessment order by the A.O.

3. Detailed Analysis:
- The CIT(A) noted the case was taken up for scrutiny, with specific queries raised by the Assessing Officer regarding deduction claimed under section 80IA.
- The Assessing Officer accepted the claim during the original assessment proceedings under section 143(3) of the Act.
- Reasons for reopening under section 148 were based on disallowance of deduction for A.Y. 2009-10, without mentioning income escaping assessment.
- The CIT(A) found the reopening was a mere change of opinion without new material, citing the judgment in CIT vs. Kelvinator of India Ltd.
- The judgment emphasized that reopening on a mere change of opinion without fresh material is impermissible, unless the disallowance in a subsequent year is based on relevant new material.
- As there was no mention of fresh material in the reasons recorded by the A.O., the reopening was deemed impermissible.
- Both sides agreed that the facts for A.Y. 2007-08 were identical to A.Y. 2008-09, leading to the dismissal of both appeals by the Revenue.

In conclusion, the ITAT Lucknow dismissed both appeals by the Revenue, upholding the CIT(A) orders for assessment years 2007-08 & 2008-09. The judgment highlighted the importance of fresh material for reopening assessments and emphasized that a mere change of opinion without new relevant material is impermissible under the law.