2014 (4) TMI 477 - HC - Income Tax

Validity of reopening of assessment Mere change of opinion - The entire issue on the basis of which the assessment is sought to be reopened was examined by the AO in the original assessment - The additional requirement flowing from proviso to section of such income chargeable to tax having escaped assessment for the failure of the assessee to disclose truly and fully all material facts, therefore need not be satisfied - if an issue had been examined by the AO in the original assessment proceedings, any reopening on the basis of such issue without any additional material would be a mere change of opinion relying upon Gujarat Power Corporation v. Asst. CIT 2012 (9) TMI 69 - Gujarat High Court - even when the AO in an order of assessment had accepted the assessee s stand and granted the claim as put forth, reopening on the same issue would not be permissible on the basis of selfsame material on record. In the return filed itself, the petitioner had produced Form 10 as well as the resolution of the Trust setting apart such amount for a period of five years to be utilized for the purpose of the Trust - It was after scrutinizing the claim of deduction under section 11(2) of the Act that the AO framed the assessment - He made no disallowance on such claim - He disallowed part of the depreciation claimed by the assessee - Though there was no reason given by the AO for making any disallowance on this score, it cannot be stated that he had not scrutinized the assessee s claim for deduction thus, the notice can be said to be based on mere change of opinion on the part of the AO and is set aside Decided in favour of Assessee.

Summary

Issues:
Challenging notice for reopening assessment for AY 2008-09 based on accumulation of trust's income under section 11(2) of the Income Tax Act, 1961.

Analysis:
The petitioner, a charitable trust, filed a return of income for AY 2008-09 declaring total income as nil and disclosed accumulation of Rs.1.30 crores under section 11(2) for promoting women's participation in the economy. The Assessing Officer scrutinized the claim, accepted it, and passed the assessment order without specific reasons for disallowance. Subsequently, the Assessing Officer issued a notice for reopening the assessment, citing irregularity in the accumulation claiming it was not for a specific purpose as required by section 11(2). The petitioner objected, contending that the issue was already examined during the original assessment. The court noted that if an issue was already examined in the original assessment without additional material, reopening would amount to a change of opinion, citing precedents. The petitioner had responded to the AO's query about the accumulation, providing details and statutory forms, which led to the acceptance of the claim initially. As the AO had scrutinized the deduction claim under section 11(2) during the original assessment, the court held that the notice for reopening was based on a mere change of opinion and quashed it, allowing the petition.

In conclusion, the High Court of Gujarat quashed the notice for reopening the assessment for AY 2008-09 issued by the Assessing Officer regarding the accumulation of the trust's income under section 11(2) of the Income Tax Act, 1961. The court emphasized that as the AO had already examined the issue during the original assessment and accepted the deduction claim without disallowance, the notice for reopening was considered a mere change of opinion, not supported by additional material. The court relied on previous judgments to support its decision and allowed the petition, disposing of the case accordingly.