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2014 (11) TMI 67 - AT - Income TaxValidity of notice for reopening of assessment u/s 147 r.w. section 148 Jurisdiction of AO Mere change of opinion No new tangible material available to AO - Held that - The assessment order that the assessee produced complete details of purchases i.e. purchase statement the reopening is on scrutiny of assessment records - the findings of AO now rejecting the objections of the assessee recording reasons for assumption of jurisdiction u/s. 147 of the Act and reasons recorded are contradictory - nothing new tangible material was available before the AO for reopening the assessment and consequently, the AO acted on the same material, which was available before him at the time of original assessment following the decision in CIT Vs. Kelvinator India Ltd. 2010 (1) TMI 11 - SUPREME COURT OF INDIA - section 147 of the Act, as substituted w.e.f. 01.04.1989 does not postulates conferment of power upon the AO to initiate reassessment proceeding upon his mere change of opinion - It cannot be accepted that only because in the assessment order, detailed reasons have not been recorded, an analysis of Munshi Mini Rice Mill AY 2007-08 the materials on the record by itself may be justifying the AO to initiate a proceeding u/s. 147 of the Act - When a regular order of assessment is passed in terms of section 143(3) of the Act, a presumption can be raised that such an order has been passed on application of mind the reopening u/s. 147 r.w.s. 148 of the Act is to be set aside Decided in favour of assessee.
Issues Involved:
1. Assumption of jurisdiction by AO under Section 147 of the Income Tax Act. 2. Issuance of notice under Section 148 of the Income Tax Act. 3. Validity of reopening of assessment based on the same material available during the original assessment. Issue-wise Detailed Analysis: 1. Assumption of Jurisdiction by AO under Section 147: The first issue concerns whether the Assessing Officer (AO) correctly assumed jurisdiction under Section 147 of the Income Tax Act. The appellant argued that the conditions precedent for assuming jurisdiction under Section 147 were not met, rendering the order passed under Sections 147/143(3) ab initio void. The appellant contended that the AO's action was based on a mere change of opinion, which is not permissible under the law. 2. Issuance of Notice under Section 148: The second issue revolves around the issuance of notice under Section 148 of the Act. The appellant argued that the notice was issued without any new tangible material and was based solely on the evidence already available during the original assessment proceedings. The appellant claimed that this action was arbitrary and constituted a change of opinion, which is not a valid ground for reopening an assessment. 3. Validity of Reopening of Assessment: The third issue pertains to the validity of reopening the assessment based on the same material available during the original assessment. The appellant argued that all relevant details, including purchase statements and other financial documents, were already submitted and considered during the original assessment. The appellant contended that the AO's reasons for reopening the assessment were contradictory and lacked any new tangible material, making the reopening invalid. Detailed Analysis: Assumption of Jurisdiction by AO under Section 147: The tribunal examined the documents produced by the assessee during the original assessment under Sections 147/143(3). It was found that the assessee had provided complete details of purchases, including cash memos, which were available to the AO during the original assessment. The tribunal noted that the AO's reasons for reopening the assessment were based on the same material that was already on record. This indicated that the AO's action was based on a mere change of opinion, which is not permissible under Section 147, as established by the Supreme Court in the case of CIT Vs. Kelvinator India Ltd. (2010) 310 ITR 561 (SC). Issuance of Notice under Section 148: The tribunal found that the notice under Section 148 was issued based on the same material that was available during the original assessment. The AO's reasons for reopening the assessment were contradictory, as he initially stated that the material was gathered from assessment records but later claimed that no such evidence was available. The tribunal concluded that there was no new tangible material to justify the reopening of the assessment, making the issuance of notice under Section 148 invalid. Validity of Reopening of Assessment: The tribunal referred to the Supreme Court's decision in CIT Vs. Foramer France (2003) 264 ITR 566 (SC), which held that reassessment based on a mere change of opinion is not valid. The tribunal noted that the AO had all the relevant information during the original assessment and that the reopening was based on the same material, without any new tangible evidence. Therefore, the reopening of the assessment was deemed invalid. Conclusion: The tribunal quashed the reopening of the assessment under Sections 147/148, holding it to be bad in law. Since the reopening was quashed, the tribunal did not address the merits of the case. The appeal of the assessee was allowed.
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