2015 (1) TMI 46 - AT - Income Tax

Reopening of assessment - Computing the book profit u/s. 115JB - interest accrued but not paid by the assessee - Change of opinion - Held that - it is evident that the reopening cannot be resorted to where the assessment has been framed under section 143(3) of the I.T. Act, after the expiry of 4 years unless the same is due to failure on the part of the assessee to disclose full or truly all material facts necessary for the assessment. - reopening in this case is clearly hit by the proviso to section 147. As already held by us as above, there is no failure on the part of the assessee to disclose fully and truly all material facts. Hence, the reopening in this case after 4 years under section 148 is not valid. Accordingly, the assessment framed in this case are hence, liable to be quashed and they are quashed as such. - reopening in this case is clearly hit by the proviso to section 147. As already held by us as above, there is no failure on the part of the assessee to disclose fully and truly all material facts. Hence, the reopening in this case after 4 years under section 148 is not valid. Accordingly, the assessment framed in this case are hence, liable to be quashed and they are quashed as such. - there is also change of opinion on the part of the AO which is also not permissible and the assessment on this account is also liable to be quashed. - assessment order passed in this case under re-assessment is void and hence, the same is quashed - Decided against Revenue.

Summary

Issues Involved:
1. Deletion of addition made by AO while computing book profit under section 115JB on account of interest accrued but not paid by the assessee.
2. Legality and jurisdiction of notice issued under section 148 for reassessment after the expiry of four years from the end of the relevant assessment year.

Analysis:

Issue 1: Deletion of Addition to Book Profit:
The primary issue in the Revenue's appeal was the deletion of the addition made by the Assessing Officer (AO) while calculating the book profit under section 115JB of the Income Tax Act. The AO had reduced interest accrued but not paid by the assessee from the book profit. However, the Tribunal observed that the AO's decision to reduce the interest was based on the returns submitted by the assessee and accepted practice from earlier years. The Tribunal held that there was no failure on the part of the assessee to disclose all material facts necessary for assessment. Therefore, the Tribunal concluded that the reassessment based on the same set of facts amounted to a change of opinion, which is not sustainable. Consequently, the Tribunal quashed the reassessment, rendering the Revenue's appeal on merits infructuous.

Issue 2: Legality of Notice under Section 148:
The assessee contended that the notice issued under section 148 for reassessment after the expiry of four years was illegal, void, and without jurisdiction. The Tribunal referred to Section 147 of the IT Act, emphasizing that reassessment cannot be initiated if the assessment has been completed under section 143(3) after the four-year limit unless there was a failure on the part of the assessee to disclose all material facts. The Tribunal noted that the reasons recorded for reopening the assessment did not reveal any new information beyond what was already disclosed by the assessee in the returns. The Tribunal held that the reassessment was hit by the proviso to section 147 as there was no failure on the part of the assessee to disclose material facts. Additionally, the Tribunal cited a Supreme Court decision to emphasize that reassessment based on a change of opinion is impermissible. Consequently, the Tribunal quashed the reassessment and dismissed the Revenue's appeal, while allowing the assessee's cross objections.

In conclusion, the Tribunal's judgment addressed the issues of deletion of addition to book profit and the legality of the notice for reassessment, ultimately ruling in favor of the assessee on both counts and quashing the reassessment while dismissing the Revenue's appeal.