2014 (9) TMI 789 - HC - Income Tax

Reassessment proceedings u/s 148 r.w. section 147 - MAT assessment made u/s 115JB Held that - The Tribunal had rightly set aside the re-assessment notice/order on the grounds that it is a case of change of opinion and the assessee cannot be faulted for failure to fully and truly disclose of all material facts - at the time of original assessment, the AO had gone into the question of interest accrued while computing income under MAT - the AO had formed an opinion and had accordingly computed the income under the applicable provisions - The assessment order may be wrong, but then it could have been corrected if it was erroneous and prejudicial to the interest of the Revenue u/s 263 of the Act - Power for re-opening u/s 147/148 of the Act is circumscribed by jurisdictional pre-conditions, two of them being that it should not be a case of change of opinion and there should be failure on the part of the assessee to fully and truly disclose all material facts- there was no merit in the appeal Decided against revenue.

Issues:
1. Re-assessment proceedings initiated under Section 148 read with Section 147 of the Income Tax Act, 1961.
2. Original assessments made on Minimum Alternative Tax (MAT) under Section 115JB after scrutiny under Section 143(3) of the Act.
3. Tribunal setting aside re-assessment notice/order on grounds of change of opinion and failure to disclose all material facts.
4. Assessing Officer's opinion during original assessment regarding interest accrued under MAT.
5. Jurisdictional pre-conditions for re-opening under Section 147/148 of the Act.

Analysis:
1. The High Court dealt with two appeals by the Revenue concerning Assessment Years 2004-05 and 2005-06, where re-assessment proceedings were initiated under Section 148 read with Section 147 of the Income Tax Act, 1961, after the end of four years from the assessment year. The original assessments were made on Minimum Alternative Tax (MAT) under Section 115JB after scrutiny under Section 143(3) of the Act.

2. The Income Tax Appellate Tribunal (Tribunal) set aside the re-assessment notice/order, citing two grounds: a case of change of opinion and the respondent-assessee's failure to fully and truly disclose all material facts. The Tribunal highlighted that the Assessing Officer had based the re-assessment on information already provided by the assessee in the return, indicating a mere change of opinion rather than new information.

3. The Tribunal emphasized that the Assessing Officer had previously accepted the assessee's practice of not providing interest accrued in the books, as evidenced by the assessment order and the computation under section 115JB. The Tribunal concluded that there was no failure on the part of the assessee to disclose all material facts necessary for assessment, and the Assessing Officer's current stance amounted to a change of opinion on the same set of facts, which was deemed unsustainable.

4. The High Court noted that the Assessing Officer had already considered the question of interest accrued while computing income under MAT during the original assessment. The Court highlighted that the Assessing Officer had formed an opinion and made the computation under the applicable provisions. The Court emphasized that if the assessment order was erroneous, it could have been corrected under Section 263 of the Act, rather than resorting to re-opening under Section 147/148, which requires specific pre-conditions.

5. The Court concluded that the power for re-opening under Section 147/148 of the Act is limited by jurisdictional pre-conditions, including that it should not be a mere change of opinion and there should be a failure on the part of the assessee to fully and truly disclose all material facts. In this context, the Court found no merit in the Revenue's appeals and dismissed them accordingly.

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