2014 (7) TMI 912 - HC - Income Tax

Reopening of assessment u/s 148 Mere change of opinion - Held that - In Hindustan Lever Ltd. v/s. R. B. Wadkar 2004 (2) TMI 41 - BOMBAY High Court it has been held that the reasons recorded by the AO are for re-opening of the Assessment are alone to be considered to determine whether or not the AO had jurisdiction to issue notice under Section 148 of the Act - the reasons as indicating an excess grant of benefit u/s 36(1)(viii) of the Act to the assessee - the AO had applied his mind to the material available before him for purposes of considering the claim for deduction u/s 36(1)(viii) of the Act. Also in Commissioner of Income Tax v/s. Kelvinator of India 2010 (1) TMI 11 - SUPREME COURT OF INDIA it has been held that it is not open to the Revenue to re-open an Assessment on the basis of mere change of opinion AO has no power to review under the shelter of re-opening of Assessment u/s 147/148 of the act - only because the conclusion arrived at earlier is erroneous would amount re-viewing the same material to come to possibly a different conclusion AO has allowed the deduction under Section 36(1)(viii) of the Act - It is not open to re-look at the same material only because it is subsequently of the view that the conclusion arrived at earlier, is erroneous Decided in favour of Assessee.

Summary

Issues:
Challenge to re-opening notice under Section 148 of the Income Tax Act, 1961 for Assessment Year 1999-2000.

Analysis:
The petitioner filed its return of income for Assessment Year 1999-2000, claiming deduction under Section 36(1)(viii) of the Act for providing long-term finance for housing. The Assessing Officer completed the assessment on 22nd March 2002, determining the total income at Rs. 239.91 Crores. Subsequently, on 29th March 2004, a notice was issued under Section 148 to re-open the assessment, citing reasons related to the deduction allowed and income chargeable to tax. The petitioner objected to the re-opening, but the Assessing Officer justified it based on alleged mistakes in the original assessment order, leading to a higher deduction than entitled. The petitioner argued that the reasons for re-opening were unclear and vague, and the Assessing Officer had already considered the deduction claim during the original assessment.

The High Court emphasized that the reasons recorded by the Assessing Officer for re-opening the assessment are crucial and must be clear and unambiguous. The court noted that the reasons provided were not comprehensible initially, but with assistance, it understood the issue to be an alleged excess grant of benefit under Section 36(1)(viii) due to a mistake. However, the court held that re-opening an assessment based on a mere change of opinion is impermissible. Referring to the Supreme Court decision in Commissioner of Income Tax v/s. Kelvinator of India, the court reiterated that re-opening an assessment solely because the earlier conclusion was deemed erroneous amounts to impermissible re-reviewing of the same material to reach a different conclusion. Consequently, the court quashed and set aside the impugned notice dated 29th March 2004, allowing the petition with no order as to costs.