2010 (1) TMI 13 - HC - Income Tax

Jurisdiction to reopen assessment failure to disclose material facts held that - under the first proviso to the newly substituted section 143(1), with effect from June 1, 1999, except as provided in the provision itself, the acknowledgment of the return shall be deemed to be an intimation under section 143(1) where (a) either no sum is payable by the assessee, or (b) no refund is due to him. It is significant that the acknowledgment is not done by any Assessing Officer, but mostly by ministerial staff. Can it be said that any assessment is done by them? The reply is an emphatic no . The intimation under section 143(1)(a) was deemed to be a notice of demand under section 156, for recovery of tax applicable. By such application only recovery indicated to be payable in the intimation became permissible - Therefore, there being no assessment under section 143(1)(a), the question of change of opinion, as contended, does not arise. ITAT set aside the orders of reassessment only on the ground there was change of opinion order of ITAT reversed reassessment upheld

Summary

Issues:
1. Validity of jurisdiction to reopen assessments under Section 147
2. Invocation of provisions of Section 147 without issuing notice under Section 143(2)
3. Applicability of proviso to Section 147 in cases completed under Section 143(1)(a)

Analysis:

Issue 1: Validity of jurisdiction to reopen assessments under Section 147
The appeals questioned the validity of the Income Tax Appellate Tribunal's decision to hold that the Assessing Officer lacked jurisdiction to reopen assessments for the years 1995-96 to 2000-01. The Tribunal found that the reassessment orders were bad as they were based on a change of opinion without any other grounds. The Tribunal did not delve into the merits of the case due to this legal finding.

Issue 2: Invocation of provisions of Section 147 without issuing notice under Section 143(2)
The revenue contended that the communication under Section 143(1) was merely an intimation to furnish details and did not constitute an assessment order. The Tribunal's decision to set aside the reassessment orders based on a change of opinion was challenged. The court emphasized that no materials regarding the Will were presented to the assessing officer at the time of accepting the returns under Section 143(1). The court referred to legal precedent to support the argument that the intimation under Section 143(1) does not amount to an assessment order, thus the question of change of opinion does not arise.

Issue 3: Applicability of proviso to Section 147 in cases completed under Section 143(1)(a)
The court highlighted that under Section 143(1)(a), the Assessing Officer does not pass an assessment order but sends an intimation. The court referenced legal provisions and circulars to emphasize that the acknowledgment of the return under Section 143(1) does not constitute an assessment. Therefore, the court concluded that the Tribunal's decision to set aside the reassessment orders solely on the ground of a change of opinion was not sustainable.

In conclusion, the court set aside the Tribunal's orders and remitted the matter for fresh consideration on the merits of the case without reference to the issue of change of opinion. The appeals were allowed in favor of the revenue, and the substantial questions of law were answered against the assessee.