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2014 (10) TMI 459 - AT - Income TaxReopening of assessment u/s 147 Change of opinion - Held that - As decided in Commissioner of Income Tax Versus Kelvinator Of India Limited 2002 (4) TMI 37 - DELHI High Court - on mere change of opinion of AO cannot be a ground for re-assessment and that amendment of sec. 147 w.e.f. 1.4.89 has not altered the position - there has been excessive loss or depreciation allowance or that there has been under assessment or assessment at a lower rate or for applying other provisions of explanation 2 to sec. 147, it must be on material and it should have nexus for holding such opinion contrary to what has been expressed earlier. Even after the amendment of sec. 147, mere change of opinion does not confirm jurisdiction on the ITO to initiate proceeding for reassessment merely by resorting to explanation 1 to sec. 147 - AO is not justified in reopening the assessment on mere change of opinion - Annexure A1 was considered at the original assessment stage and on that basis, the AO made addition on account of unexplained investment in property in a sum - The AO has referred to the same properties in the original assessment order, which are referred to now in the reasons for reopening of assessment for the year under consideration - The assessee filed explanation and evidences before the AO at original assessment stage explaining the investment in the properties - Whatever addition was made by the AO at original stage on the identical facts have been deleted by the CIT(A) as well as confirmed by the Tribunal. The propriety demands that the AO should not have resorted to proceedings to reopen assessment on identical facts - All facts were all along were within the knowledge of the AO at original assessment stage, therefore, re-appreciation of evidence at subsequent re-assessment proceedings is not permitted on mere change of opinion by subsequent AO - The re-assessment proceedings have been initiated again on similar issue and totally on identical facts regarding investment in property which have already been considered in the original assessment proceedings - It is a case of change of opinion and such a change of opinion for reopening of section 147 is not permitted under law - The AO in the re-assessment order himself has mentioned that addition is made on account of unexplained expenditure/investment in the properties in the original assessment order - No new material or fresh information have been received at the re-assessment stage - it is merely a fresh application of mind by the subsequent AO on the same set of facts - the seized material which was the basis of making some additions at original assessment stage, is the document of the department found during the course of search and once the same has been appreciated and considered by the AO, there is no question on the part of the assessee not to disclose fully and truly all material facts necessary for hisassessment - The re-appreciation of seized material in subsequent proceedings by the AO is, thus, wholly unjustified particularly when such a seized material was not considered worthy by the CIT(A) in the original appellate proceedings deleting the addition on the same seized material - Therefore, there is no question of re-appreciating the same facts which have been duly considered by the first appellate authority prior to reopening of assessment -CIT(A) on proper appreciation of facts and material on record, rightly quashed the reassessment proceedings the order of the CIT(A) is upheld in quashing and annulling the reassessment order Decided against revenue.
Issues Involved:
1. Validity of reopening the assessment under Section 147 of the Income-tax Act, 1961. 2. Whether the reassessment was based on a mere change of opinion. 3. The legality of the additions made by the Assessing Officer (AO) in the reassessment order. Detailed Analysis: 1. Validity of Reopening the Assessment under Section 147: The Revenue challenged the order of the Commissioner of Income Tax (Appeals) [CIT(A)] which annulled the reassessment order under Sections 147/143(3) dated 10.12.2010. The original assessment was completed under Section 143(3) on 29.12.2006, based on a search and seizure operation conducted on 16.09.2004. The AO reopened the assessment on 10.09.2009, citing reasons to believe that income had escaped assessment due to unexplained expenditures recorded in seized documents, specifically Annexure A-1. The AO argued that the original assessment did not adequately address the unexplained expenditures, leading to the reopening of the assessment. 2. Whether the Reassessment was Based on a Mere Change of Opinion: The CIT(A) annulled the reassessment, stating it was based on a mere change of opinion. The original assessment had already considered the seized documents (Annexure A-1) and made certain additions. The AO in the original assessment had examined the investments recorded in the seized documents and made an addition of Rs. 28,11,200. The CIT(A) found that the reopening was not based on new material but on a reevaluation of the same documents previously considered. The CIT(A) referenced the Supreme Court's decision in CIT vs. Kelvinator India, which held that reassessment based on a mere change of opinion is not permissible. 3. Legality of the Additions Made by the AO in the Reassessment Order: The AO made an additional assessment of Rs. 30,13,800 in the reassessment order, arguing that the original assessment did not cover the full amount of unexplained expenditures. The CIT(A) found that the AO in the original assessment had already formed an opinion on the seized documents and made necessary additions. The reassessment was thus deemed invalid as it was merely a change of opinion without any new material evidence. The CIT(A) concluded that the proper remedy for the Revenue, if they believed the original assessment was erroneous, was to invoke Section 263 for revision, not Section 147 for reassessment. Conclusion: The ITAT upheld the CIT(A)'s decision to annul the reassessment order, agreeing that the reassessment was based on a mere change of opinion and not on any new material evidence. The ITAT reiterated that reassessment under Section 147 cannot be justified on the basis of a mere change of opinion, as per the legal precedents set by the Supreme Court and various High Courts. The departmental appeal was dismissed, affirming the CIT(A)'s order. Order: The appeal by the Revenue is dismissed. The reassessment order under Sections 147/143(3) dated 10.12.2010 is annulled.
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