2018 (1) TMI 144 - HC - Income Tax

Reopening of assessment - valid reasons to believe - Held that - We find from the facts that the first notice for reopening was issued virtually on the same ground and the assessee cooperated in the assessment proceedings and the Assessing Officer appears to have been satisfied with the submission and completed the assessment without any additions. Subsequently, there has been a change of officer who has issued the second reopening notice which has ultimately culminated in the assessment order dated 28.03.2013. Thus we find that the Tribunal has done thorough factual exercise and held that the reopening for the second time on the same issue is nothing but change of opinion and is not permissible in law. Furthermore, the Tribunal has specifically recorded that the revenue could not establish that the income has escaped assessment due to the failure on the part of the assessee. Further, this finding recorded by the Tribunal is on re-appreciation of the factual position. No substantial question of law.

Summary

Issues:
1. Jurisdiction of the Appellate Tribunal in quashing notice u/s.148 of the Income Tax Act.
2. Examination of reasons for reopening reassessment by the Appellate Tribunal.
3. Failure of the Revenue to establish income escaped assessment due to the assessee's failure.

Jurisdiction of the Appellate Tribunal:
The appeal was filed by the Revenue against the ITAT's order dated 09.03.2017. The substantial questions of law raised included the correctness of quashing the notice u/s.148 of the Income Tax Act by the Appellate Tribunal without considering relevant sections. The Tribunal held that the second reopening of assessment was a change of opinion, which is impermissible in law. It was noted that the revenue failed to establish that income had escaped assessment due to the assessee's failure. The Tribunal's decision was based on a thorough factual exercise, concluding that no legal questions arose for consideration in the appeal.

Examination of Reasons for Reopening:
The factual background revealed that the assessee filed an appeal against the order of the Commissioner of Income Tax for the assessment year 2005-06. The assessment order dated 28.03.2013 was a result of the second reopening notice issued to the assessee. The Tribunal found that the second reopening was a change of opinion and illegal. The Commissioner of Income Tax (Appeals) partly agreed with the assessee's submissions and remanded the matter for reexamination by the Assessing Officer. The Tribunal's decision to allow the assessee's appeal was based on the failure of the revenue to establish that income had escaped assessment due to the assessee's actions.

Failure to Establish Income Escaped Assessment:
The Tribunal specifically noted that the revenue could not prove that income had escaped assessment due to the assessee's failure. The assessee had cooperated during the assessment proceedings, and the Assessing Officer had completed the assessment without any additions. The Tribunal's finding was based on a re-appreciation of the factual position, emphasizing that the revenue's case was not substantiated. Consequently, the Tax Case Appeal was dismissed, with no costs awarded.