2015 (6) TMI 283 - AT - Income Tax

Reopening of assessment - assessee challenged the issue of notice u/s.148 in respect of assessment completed u/s. 153A - Held that - Proceeding initiated u/s. 153A for all six years shall become a subject matter to assessment u/s.153(A) of the Act and the Assessing officer shall have freehand, on assessment, only on the proceeding that are pending to frame the assessment afresh. But in the case where the proceedings have reached finality, the assessment u/s.153A r.w.s.143(3) and where certain material document have been found indicating undisclosed income, the addition shall have to be restricted to those documents or incrementing documents, clubbed only to assessment framed originally. As law does not permit the Assessing Officer to disturb already concluded assessment, whether on the date of intimation of search u/s.132 or requisition of books, no proceedings is pending in the search, materials found indicating incrementing materials, the Assessing Officer engrosses a jurisdiction where he has clubbed two sets of income, return income and unearthed income, had arrived at the total income. Thereafter, if he had a reason to believe the said assessment can be re-assessed u/s.148 of the Income Tax Act as discussed in the earlier paras so as to reopen the assessment, there should be sufficient materials. There is no arbitrary power to the Assessing Officer to reopen on the basis of change of opinion. In the present case we have gone through the reasons for reopening of assessment. It cannot be proper reason to reopening. The Assessing Officer has no power to review his own order. The re-assessment has to be made on fulfillment of certain free condition and if the concept stating change of opinion is removed in the graph of re-assessment or/of assessment, redo take place. Once again treat the concept of change of opinion inbuilt test to check to abusive power by Assessing Officer. Hence, the Assessing Officer has power to reopen, provided there is tangible material to come to the conclusion that there is escapement of income from assessment. The reason must have live link with the foundation of belief. In the present case, the Assessing Officer considered seized material No.136 in annexue NSK/B & D/S dated 20.02.2008 and also seized material document NSK/B & D/S dated 20.02.2008 while framing original assessment and arrived the value of property at ₹ 1,56,65,000/-. Thereafter, the Assessing Officer considered the same seized material to arrive the value of sale property at ₹ 1,81,27,940/- which is not possible. Hence, in our opinion, the reassessment is only on change of opinion which cannot be permitted. Thus the Commissioner of Income Tax (Appeals) has taken correct view in annulling of the re-opened assessment order. - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of the re-assessment order.
2. Jurisdiction of the Assessing Officer to issue notice under Section 148 in respect of assessments completed under Section 153A.
3. Whether the re-assessment amounts to a change of opinion.

Issue-wise Detailed Analysis:

1. Validity of the Re-assessment Order:
The Revenue challenged the Commissioner of Income Tax (Appeals) [CIT(A)]'s decision that the re-assessment order was invalid, arguing that the CIT(A) wrongly deleted the addition made in the re-assessment order. The CIT(A) held that the re-assessment was based on the same seized material previously considered in the original assessment under Section 153A read with Section 143(3). The CIT(A) found that reopening the assessment on the same material amounted to a change of opinion, which is against the settled position of law. Furthermore, the CIT(A) noted that the reopening was done after four years from the end of the assessment year, and there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. Therefore, the re-assessment was deemed invalid, and the addition made was directed to be deleted.

2. Jurisdiction of the Assessing Officer to Issue Notice under Section 148:
The assessee contended that the Assessing Officer (AO) had no jurisdiction to issue notice under Section 148 for assessments completed under Section 153A. The AO had issued a notice under Section 148 to bring the balance amount of Rs. 24,62,840 to tax, which was not disclosed by the assessee. The assessee argued that Section 153A, which deals with assessments following a search, has an overriding effect, and hence, the AO cannot issue a notice under Section 148 for the same period. The Tribunal upheld this view, citing the non obstante clause in Section 153A(1), which implies that assessments for the six years following a search should be conducted under Section 153A, not Section 148. The Tribunal referenced the case of State Bank of India vs. Deputy Commissioner of Income Tax, which supported the view that the AO cannot proceed under Section 148 when Section 153A is applicable.

3. Re-assessment as a Change of Opinion:
The assessee argued that the re-assessment was merely a change of opinion, as the AO had already considered the seized material during the original assessment under Section 153A read with Section 143(3). The Tribunal agreed with the assessee, noting that the AO had initially assessed the value of the property based on the seized material and later attempted to reassess it using the same material. The Tribunal emphasized that the AO cannot reopen an assessment merely to re-evaluate the same facts and evidence, as this constitutes a change of opinion, which is not permissible under the law. The Tribunal referred to the judgment of the Rajasthan High Court in Mukesh Modi vs. DCIT, which supports the principle that re-assessment based on a change of opinion is not valid.

Conclusion:
The Tribunal upheld the CIT(A)'s decision to annul the re-assessment order, agreeing that it was based on a change of opinion and that the AO lacked jurisdiction to issue a notice under Section 148 for assessments covered by Section 153A. Consequently, the cross-objection filed by the assessee was partly allowed, and the Revenue's appeal was dismissed as infructuous. The order was pronounced on 27.3.2015.