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2015 (11) TMI 643 - AT - Income TaxValidity of reopening of assessment - CIT(A) quashed reopening orders - Held that - CIT (A) has rightly held that the AO was not correct to assume jurisdiction over the assessee for the year under consideration and no new facts were brought on record which gave reasons to believe that the income of the assessee had escaped assessment and, therefore, the reopening of assessment in the present case had been merely on the basis of change of opinion. Further, it is evident that all the material information was available in the course of original assessment for framing an assessment and the AO failed to bring on record new facts or material which provided reasons to believe that the income of the assessee has escaped assessment. Moreover, we take note that the objection of the assessee against reopening has not been answered by a speaking order as mandated by the Apex Court in GKN Driveshafts (India) Ltd. vs. ITO (2002 (11) TMI 7 - SUPREME Court) which also vitiates the reopening of the original assessment. In the aforesaid circumstances, we uphold the view of the ld. CIT (A) that the reopening is based on change of opinion which is not permissible as held by Hon ble Supreme Court in CIT vs. Kelvinator of India Ltd. (2010 (1) TMI 11 - SUPREME COURT OF INDIA).- Decided in favour of assessee.
Issues Involved:
1. Validity of the reopening of assessment proceedings under Sections 147/148 of the Income-tax Act, 1961. 2. Whether the reassessment was based on a mere change of opinion. Detailed Analysis: 1. Validity of the reopening of assessment proceedings under Sections 147/148 of the Income-tax Act, 1961: - Background: The assessee, a Central Government undertaking, filed its return of income for the assessment year 2007-08 on 26.10.2007, declaring an income of Rs. 6,25,63,250/-. The assessment was completed under Section 143(3) at Rs. 11,30,51,720/-. The AO issued a notice under Section 148 on 16.01.2012 after recording reasons for reopening, leading to a reassessment at Rs. 8,33,70,290/-. - CIT (A) Decision: The CIT (A) quashed the reassessment proceedings, holding that the reasons for reopening were based on the balance sheet and profit & loss account already available during the original assessment. It was determined that no new material facts had surfaced, and thus, no income had escaped assessment. - Legal Precedents Cited: - Xerox Modicorp Ltd. vs. DCIT: The audit objection could not constitute tangible material for reassessment. - CIT vs. USHA International Ltd.: The AO must prove the failure of the assessee to disclose fully and truly all material facts necessary for assessment. - M/s Kelvinator of India Limited: The AO cannot reopen assessments based on a mere change of opinion. - OHM Stock Brokers (P) Ltd. vs. CIT & Anr.: The AO must have tangible material to conclude that there is an escapement of income. - Tribunal's Findings: The Tribunal upheld the CIT (A)'s decision, reiterating that all the information was furnished during the original assessment, and no new material facts were brought on record. The reopening was based on the same facts previously assessed, which does not justify reopening under Section 147. 2. Whether the reassessment was based on a mere change of opinion: - CIT (A) Decision: The CIT (A) concluded that the reassessment was based on a reappraisal of the same facts by a different AO, which constitutes a change of opinion, not permissible under the law. - Legal Precedents Cited: - CIT vs. Kelvinator of India Ltd.: Reopening based on a mere change of opinion is not permissible. - GKN Driveshafts (India) Ltd. vs. ITO: The AO must dispose of the assessee's objections by a speaking order before completing the reassessment. - Tribunal's Findings: The Tribunal agreed that the reassessment was based on a mere change of opinion. The AO did not dispose of the objections by a speaking order, further invalidating the reassessment. The Tribunal emphasized that all material facts were disclosed during the original assessment, and no new facts were presented to justify the reassessment. Conclusion: The Tribunal upheld the CIT (A)'s decision to quash the reassessment proceedings under Sections 147/148, concluding that the reopening was based on a mere change of opinion and lacked new tangible material. The appeal of the revenue was dismissed.
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