2017 (11) TMI 328 - HC - Income Tax

Reopening of assessment - proof of case of change of opinion - petitioner s/assessee s contention is that, there was no specific direction issued by CIT (A) to re-open the assessment, and it is a misreading of the order passed by CIT (A), dated 13.10.2016 - Held that - We do not agree with the said submission in the light of the language and observations made by CIT (A) in his order, dated 13.10.2016. The reasons for deleting the addition made in the hands of the assessee-Firm for the year 2012-13, is because, the capital was required to be introduced in the course of earlier two financial years, i.e. FY 2009-10 and F Y 2010-11. The CIT (A) did not stop with this observations, but made further observation by stating that, the Assessing Officer can only take cognizance of the matter, by way of initiating suitable proceedings for the assessment years 2010-11 and 2011-12. The petitioner seeks to interpret the word Can by stating that, it cannot be construed as direction, but the petitioner should read the word Can along with next word Only. CIT(A) has pointed out that the Assessing Officer can only take cognizance of the matter, by way of initiating suitable proceedings for the assessment years 2010-11 and 2011-12. In such circumstances, it cannot be taken, as if, the observation contained in the order passed by CIT(A) is of no consequence. Such plea cannot be raised by the petitioner/assessee, as it would be fatal to their case, because, it is only on account of such observations, they got relief before CIT (A). The above observations were affirmed by ITAT. Even assuming for the sake of arguments that, there is no specific direction, in the order passed by CIT (A) yet, the Assessing Officer was entitled to exercise his powers under Section 148 as there was no opportunity to verify the transactions claimed to have made in those years. Therefore, it is not a case of change of opinion. Consequently, the challenge to the impugned proceedings has to necessarily fail. - Decided against assessee.

Summary

Issues:
Challenge to re-opening of assessment for the assessment years 2010-11 and 2011-12 under the Income Tax Act, 1961.

Analysis:
The petitioner, a Partnership Firm, challenged the re-opening of assessment for the years 2010-11 and 2011-12 under the Income Tax Act, 1961. The petitioner had previously filed returns for the assessment year 2012-13, which were scrutinized, resulting in the addition of an amount under Section 68 of the Act. However, the petitioner's appeal against this addition was allowed by the CIT (A) and further affirmed by the ITAT. During the pendency of the Revenue's appeal before the ITAT, the respondent issued a notice under Section 148 to re-open the assessment for the earlier years. The petitioner objected to this re-opening, arguing that it was a case of change of opinion and that all relevant details had been provided during the assessment for the year 2012-13. The respondent, on the other hand, contended that there were facts not previously considered by the Assessing Officer, justifying the re-opening. The CIT (A) had made observations in the order allowing the petitioner's appeal, indicating that the Assessing Officer could take cognizance of the matter for the earlier years. The petitioner argued that these observations did not amount to a direction to re-open the assessment. However, the court disagreed, emphasizing that the observations were crucial in granting relief to the petitioner. The court held that even without a specific direction, the Assessing Officer was entitled to re-open the assessment under Section 148 due to unverified transactions from the earlier years. Therefore, the challenge to the re-opening of assessment proceedings was dismissed, allowing the Assessing Officer to complete the assessment as per the law.

In conclusion, the court dismissed the Writ Petitions, permitting the Assessing Officer to finalize the assessment under the Income Tax Act, 1961. The petitioner was granted the liberty to pursue available remedies post-assessment. No costs were awarded, and connected Writ Miscellaneous Petitions were closed.