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2012 (7) TMI 178 - AT - Income TaxLegal infirmities in reassessment framed u/s 147 - CIT(A)stated that the AO should have reason to believe that income had escaped assessment - Held that - The AO while issuing intimation u/s 143(1) applied his mind and denied to allow credit for TDS as income against this TDS was not considered by the assessee in the taxable income. Such intimation u/s 143(1) was accepted by the assessee and it has become final. Then the notice u/s 148 has been issued on the basis of same note given by the assessee in the return of income and the TDS certificate which was filed in the original return. As the AO has already considered the same while issuing the notice u/s 143(1) and formed an opinion that credit for TDS is not allowable as the income was not offered. Subsequently, by issuing notice under Section 148, he changed his opinion and came to the conclusion that interest income is taxable in AY 2003-04. It is a clear case of change of opinion - no justification to interfere with the order of CIT(A)- against revenue.
Issues Involved:
1. Validity of reopening assessment under section 147 based on reasons recorded. 2. Assessment on merit disregarding the year of taxability of enhanced compensation. 3. Change of opinion in reopening assessment under section 147. Analysis: Issue 1: Validity of reopening assessment under section 147 based on reasons recorded: The Revenue appealed the decision of the CIT(A) regarding the reopening of assessment under section 147. The Revenue contended that the Assessing Officer had sufficient reason to believe that income had escaped assessment, fulfilling the requirements post the amendment in section 147 from 01-04-1989. The CIT(A) annulled the assessment, citing legal infirmities. However, the Tribunal observed that the original order was passed under section 143(1), and the CIT(A) quashed the reopening on the basis of a change of opinion. The Tribunal noted that the Assessing Officer's opinion was formed after proper consideration, and the intimation under section 143(1) was accepted by the assessee. The Tribunal upheld the CIT(A)'s decision, emphasizing that there was no valid reason to reverse it. Issue 2: Assessment on merit disregarding the year of taxability of enhanced compensation: The Revenue contended that the CIT(A) erred in annulling the assessment without deciding it on merit, particularly concerning the taxability of enhanced compensation. The Revenue referred to a Supreme Court judgment regarding the year of taxability of enhanced compensation. On the other hand, the assessee argued that the assessment was a clear case of change of opinion by the Assessing Officer, which is impermissible. The Tribunal noted that the assessee had provided detailed information in the return of income, and the Assessing Officer had applied his mind while issuing the intimation under section 143(1). The Tribunal agreed with the assessee's argument, citing various High Court decisions that assessment cannot be reopened solely on the basis of a change of opinion. Issue 3: Change of opinion in reopening assessment under section 147: The Tribunal extensively analyzed the concept of change of opinion in the context of reopening assessments under section 147. It referred to relevant case laws and highlighted that the Assessing Officer's opinion was formed during the initial assessment process. The Tribunal emphasized that in this case, the Assessing Officer had already considered the relevant facts before issuing the notice under section 148. Therefore, the Tribunal concluded that the reassessment was indeed a change of opinion and not valid. The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal. In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision regarding the validity of reopening the assessment and the impermissibility of reassessment based on a change of opinion.
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