2016 (5) TMI 95 - AT - Income Tax

Reopening of assessment - reasons to believe - Held that - From the particulars called for by the Assessing Officer at the time of original assessment proceedings submissions made by the assessee before the Assessing Officer at the time of original assessment proceedings and the reasons recorded for initiation of reassessment proceedings it is very much evident that the reassessment proceedings were initiated by the Assessing Officer on the basis of same set of facts which were available before the Assessing Officer at the time of the original assessment. We are of the considered view that the Assessing Officer at the time of original assessment was very well aware about the primary facts. The Assessing Officer while reopening the assessment under section 147 has made no reference to any new material which has come into her possession after the completion of the original assessment under section 143(3) of the Act. In our opinion it is merely a fresh application of mind by the Assessing Officer to the same set of facts. Thus it is our considered view that it is a case of mere change of opinion on the material which was already available on record at the time of completion of the original assessment. Therefore the proceedings for reassessment under section 147 fail to stand the test. - Decided in favour of assessee

Summary

Issues:
Reopening of assessment under section 147 of the Income-tax Act, 1961 based on change of opinion without new material.

Analysis:

Issue 1: Reopening of Assessment under Section 147
The appeal pertains to the assessment year 2002-03, where the assessee challenged the reassessment proceedings initiated by the Assessing Officer under section 147 of the Act. The Assessing Officer reopened the case citing reasons such as grant/subsidy not included in income, irregular debit of royalty expenditure, incorrect allowance of inadmissible expenditure, and liabilities not disallowed. The assessee contended that the reassessment was based on the same facts available during the original assessment under section 143(3), without any new information. The authorized representative argued that the reassessment was a mere change of opinion without fresh material, citing relevant case laws. The Departmental representative argued that the Assessing Officer can reopen assessment if income has escaped assessment, even if the original assessment was accepted. The Tribunal held that the reassessment was invalid as it was solely based on a fresh scrutiny of existing facts without new tangible material, thus quashing the reassessment proceedings under section 147.

Outcome:
The Tribunal allowed the assessee's appeal, holding the reassessment proceedings as invalid due to being a mere change of opinion without new material. The order passed under section 147/143(3) was deemed without jurisdiction and quashed. The remaining grounds were not adjudicated as they became infructuous. The appeal of the assessee was allowed, and the order was pronounced in open court on February 11, 2016.