2016 (6) TMI 971 - AT - Income Tax

Validity of reassessment proceedings - Held that - No fresh material or information was referred to by the AO in the reasons recorded for re-opening the assessment, that the material referred to was the same, that the reasons arose from the perusal of the existing assessment record. Thus the order passed by the AO for re-opening the assessment for the year under appeal was invalid. Therefore, consequential order passed has to be treated an invalid order. - Decided in favour of assessee

Summary

Issues:
Validity of reassessment proceedings based on change of opinion.

Detailed Analysis:
The case involved an appeal challenging the order of the CIT(A)-4, Mumbai, regarding the reassessment proceedings initiated by the Assessing Officer (AO). The AO had reopened the case based on reasons related to the set-off of losses and the treatment of income from house property. The First Appellate Authority (FAA) upheld the reopening, stating that there were mistakes in the original assessment order. However, during the hearing, the Authorized Representative (AR) argued that there was no new material for the AO to form a belief of income escapement, referring to various cases to support the argument. The Tribunal noted that the AO had re-appraised existing facts without any new material, indicating a change of opinion rather than a valid reason for reassessment.

The Tribunal highlighted that the AO had already considered the issues during the original assessment proceedings and formed a different opinion afterward. Citing the principles of taxation jurisprudence, the Tribunal emphasized that reopening a completed assessment should be based on fulfilling specific preconditions under section 147 of the Act. Referring to relevant case law, including Central Warehousing Corporation Ltd. and Turner Broadcasting Systems Asia Pacific Inc., the Tribunal concluded that the AO's act of reopening the assessment was invalid due to being based on a change of opinion without any fresh material or information.

In light of the jurisdictional issue being decided in favor of the assessee, the Tribunal ruled the AO's order for reopening the assessment as invalid. Consequently, the appeal filed by the assessee was allowed, and the order was pronounced in the open court on 24th June 2016.