2015 (7) TMI 1422 - HC - Income Tax

Reopening of assessment u/s 147 - Disallowance of broken period interest - Whether Tribunal was right in holding that the reopening of assessment was not proper ? - HELD THAT - There is a specific finding of the Tribunal that re-openings were done after the end of four years from the assessment years in question and, therefore, the first proviso to Section 147 will squarely apply and it is required for the Revenue to show that there was failure on the part of the assessee to disclose fully and truly material facts necessary for the assessment. Therefore, in those appeals the Tribunal was in favour of the assessee.

Summary

Issues:
1. Reopening of assessments under Section 147 of the Income Tax Act
2. Claim relating to broken period interest

Reopening of Assessments under Section 147:
The High Court considered the issue of reopening assessments under Section 147 of the Income Tax Act. Referring to the decision in the case of Commissioner of Income Tax vs. Kelvinator of India Ltd., the court highlighted that the power to reopen assessments post the 1989 amendment is broader. However, the court emphasized that this power does not allow for arbitrary reopening based on a mere change of opinion. The court distinguished between the power to review and the power to reassess, noting that reassessment must be supported by tangible material indicating income escapement. The court stressed the importance of a live link between the reasons and the belief for reopening assessments. The court concluded that the reassessment for the assessment year 1990-91 was sought on a mere change of opinion, lacking fresh material, and thus lacked jurisdiction under Section 147.

Claim Relating to Broken Period Interest:
Regarding the claim relating to broken period interest, the court examined the original assessment made under Section 143(3) and the subsequent reopening based on a decision in the case of CIT vs. M/s.Vijaya Bank. The court noted that the decision in the Vijaya Bank case was available to the Assessing Officer during the original assessment. As the Officer had considered and granted relief based on this decision, the court held that there was no basis for reopening the assessment on the same grounds. The court emphasized that no new materials were presented to justify the reopening. Consequently, the court set aside the order of the Income Tax Appellate Tribunal, ruling that there were no grounds to support the Assessing Officer's jurisdiction to reopen the assessment.

Conclusion:
In the final judgment, the High Court dismissed all tax case appeals, citing a lack of legal questions for consideration based on previous decisions in the assessee's own case. The court upheld the decisions related to the reopening of assessments under Section 147 and the claim concerning broken period interest, emphasizing the need for tangible material and a valid basis for reassessment.