2017 (5) TMI 475 - AT - Income Tax

Reopening of assessment - reasons to believe - Held that - The present case is one of change of opinion. Further as regards the requirement of true and correct disclosure by the assessee find that in the reasons recorded the A.O has nowhere made any allegation on this count. Not even a whisper of any allegation that there has been a failure on the part of the assessee to disclose fully and truly all material particulars necessary for assessment. See Allied Strips Limited Versus Assistant Commissioner Of Income Tax Central Circle-15 2016 (5) TMI 580 - DELHI HIGH COURT - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of reopening assessment after four years.
2. Allegation of change of opinion by the Assessing Officer (A.O).
3. Requirement of full and true disclosure by the assessee.

Issue-wise Detailed Analysis:

1. Validity of Reopening Assessment After Four Years:
The case was reopened by issuing a notice under section 148 of the Income-tax Act, 1961, based on information from the Investigation Wing that the assessee had taken accommodation entries from entry operators. The CIT(A) upheld the reassessment proceedings, stating that the notice under section 148 was issued within the six-year limit from the end of the A.Y. 2007-08. The reopening was based on new information about accommodation entries worth ?10 lakhs, which was not available during the original assessment. The Tribunal noted that the A.O did not allege any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment in the reasons recorded for reopening.

2. Allegation of Change of Opinion by the Assessing Officer (A.O):
The assessee argued that the reopening was merely a change of opinion, which is not permissible by law. During the original assessment, the A.O had requested and received detailed information about the shareholders and share capital. The Tribunal referred to the decision in CIT Vs. Multiplex Treading and Industrial Co. Ltd and Allied Strips Ltd Vs. ACIT, where similar queries were raised during the original assessment, and it was held that reopening in such cases amounted to a change of opinion. The Tribunal observed that the A.O had formed an opinion during the original assessment by not making any additions after considering the detailed information provided by the assessee.

3. Requirement of Full and True Disclosure by the Assessee:
The Tribunal emphasized that for reopening an assessment beyond four years, there must be an allegation of failure to disclose fully and truly all material facts necessary for the assessment. In this case, the reasons recorded by the A.O did not contain any such allegation. The Tribunal cited the decision in Haryana Acrylic Manufacturing Company Vs. Commissioner Of Income-tax, which held that in the absence of such an allegation, any action under section 147 beyond the four-year period would be without jurisdiction.

Conclusion:
The Tribunal concluded that the reassessment proceedings were invalid on both counts: change of opinion and lack of allegation of failure to disclose fully and truly all material facts. The appeal of the assessee was allowed, and the order for reopening the assessment was set aside.