2014 (8) TMI 794 - AT - Income Tax

Reopening of assessment u/s 147 - Change of opinion - Income from house property - Sahakar Bhavan property Held that - When a new fact comes into picture, and there is a change in the factual matrix of the case consequent thereto, it cannot be said to be a review, which predicates examining the same factual matrix, which may lead to a view either in agreement or in modification of that formed earlier - even one fact can change the whole complexion and lead to a change of opinion formed in the absence of such fact or its consideration Relying upon Padmasundara Rao (Decd.) v. State of Tamil Nadu 2002 (3) TMI 44 - SUPREME Court - the information though must come in the possession of the AO after the assessment, but even if it is such that it could have been obtained during the assessment itself, i.e., from an investigation of the materials on record or the facts disclosed thereby or from other enquiry or research into facts or law, but was not in fact obtained, the jurisdiction of the assessing authority is not affected. The matter is purely factual, and it is for this reason that the comparative cases assumed prime relevance - The exercise was made even for the current year - Even though in all the cases so compared there was a deposit by the tenant accompanying the rental arrangement, it was lower than that obtaining so that the rental being higher, the same was adopted in the assessee s case on best available information basis - the rent fetched without or a lower deposit is to that extent more comparable and nearer to the requirement of law, i.e., the fair rental value of the property per se - there is a valid assumption of jurisdiction u/s.147 of the Act. Power to review an order versus Power to reassessment Held that - There is a difference between the power to review and power to reassess - Placing such a restriction on the power of assessment of the assessing authority is contrary to the scheme of the Act, besides would operate to cause prejudice to the Revenue - Even the CBDT does not under law have the power to interfere with the A.O. s independence in the matter of making the assessment, being precluded u/s. 119(1)(a) for requiring the A.O. to make the assessment or to dispose of a particular case in a particular manner, as well as in fact the first appellate authority - non-filing of an appeal by the Revenue in one case could not be considered as an acceptance on its part of the issue decided by a lower appellate forum, so that it is at liberty to prefer an appeal before the high court or the apex court on the same issue - Revenue has established that there was no acceptance by it of the view of the first appellate authority, but was constrained in appealing there-against per force s. 268A - a provision prescribing a procedure for preventing repetitive appeals u/s.158A of the Act is made in law only to ease the tedium involved in making repetitive appeals on the same question of law. The AO cannot be bound in any manner in the matter of making the assessments, except where and to the extent regulated and provided for by law - The same, it may be appreciated, does not impinge upon or invalidate the doctrine of merger, which would extend only to the year for which the first appellate authority has passed the order, and for which year, the A.O. has in fact already made the addition/disallowance which is sought to be restrained or estopped -There being no issue with regard to the satisfaction of the conditions for assumption of jurisdiction on this ground, which was not at all a subject matter of consideration at the time of original assessment, there is thus a valid assumption of jurisdiction qua this ground as well - If a material has been considered, there is no question of it being revisited or reconsidered again, as the same would be only a review Decided in favour of Revenue.

Issues Involved:
1. Validity of reassessment proceedings initiated under section 147 of the Income Tax Act.
2. Consideration of income from house property, specifically the Sahakar Bhavan property.
3. Disallowance of maintenance charges paid to the housing society.

Issue-wise Detailed Analysis:

1. Validity of Reassessment Proceedings:
The reassessment was initiated based on two grounds: under-assessment of income from the Sahakar Bhavan property and inadmissible maintenance charges. The Commissioner of Income Tax (Appeals) [CIT(A)] quashed the reassessment, citing it as a "change of opinion." The appellate tribunal disagreed, stating that reassessment is permissible if new facts emerge that were not considered during the original assessment. The tribunal emphasized that the "reason to believe" is a legislative check against arbitrary reassessment and does not amount to a review if based on new material facts.

2. Income from House Property (Sahakar Bhavan Property):
The original assessment did not consider the rental value assessed for the Sahakar Bhavan property for the year 2004-05, which was significantly higher than the value returned by the assessee for the current year. The tribunal noted that there was no evidence that the Assessing Officer (A.O.) had considered this material during the original assessment. The tribunal concluded that the reassessment was valid as the A.O. had a bona fide reason to believe that there was an escapement of income. The tribunal also noted that the difference in rental values was substantial, justifying the reassessment.

3. Disallowance of Maintenance Charges:
The assessee argued that the A.O. could not have formed an opinion on the disallowance of maintenance charges due to a binding decision by the first appellate authority for the year 2004-05, which the Revenue had accepted by not appealing. The tribunal, however, held that the A.O. is not bound by the decision of the first appellate authority for a different year and can form an independent opinion. The tribunal emphasized that the doctrine of merger applies only to the year for which the appellate order was passed and does not preclude the A.O. from reassessing similar issues for other years.

Case Law Consideration:
The tribunal referred to several judicial precedents, including decisions by the apex court, to support its findings. The tribunal noted that the principle of "reason to believe" is well established and that reassessment is permissible if based on new facts or material not considered during the original assessment. The tribunal also clarified that the non-filing of an appeal by the Revenue in one case does not preclude it from pursuing the same issue in other cases.

Conclusion:
The tribunal allowed the Revenue's appeal, holding that the reassessment proceedings were valid and justified based on new material facts. The assessee's cross-objection was dismissed as infructuous, and the matter was remanded to the CIT(A) for adjudication on merits. The order was pronounced in the open court on August 08, 2014.

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