2018 (1) TMI 1306 - HC - Income Tax

Reopening of assessment - Held that - The findings recorded by the Commissioner (Appeals) indicate that during the course of the original assessment, the Assessing Officer had examined the same issue in respect of which assessment is sought to be reopened and after hearing the assessee, had not made any addition. Under the circumstances, it is apparent that the Assessing Officer, at the relevant time, during the course of scrutiny assessment had formed an opinion in respect of the ground on which the assessment is sought to be reopened. The reopening of assessment, therefore, is clearly based upon a mere change of opinion, which is not permissible in law. Tribunal did not commit any error in upholding the order passed by the Commissioner (Appeals) in setting aside the reopening of the assessment.

Summary

Issues:
1. Challenge to the order of the Income Tax Appellate Tribunal under section 260A of the Income Tax Act, 1961.
2. Validity of reopening the assessment under section 147 of the Act.
3. Addition of unaccounted investment in the reassessment.

Analysis:
1. The appellant revenue challenged the order of the Income Tax Appellate Tribunal, Ahmedabad Bench, proposing substantial questions of law. The Tribunal had not appreciated the facts available on record, leading to the contention that the order was perverse. The original assessment order highlighted the lack of basic details regarding construction expenses and property investment. The Assessing Officer reopened the case, adding a significant amount. The Tribunal and CIT(A) were criticized for not considering crucial facts and passing orders without appreciating the basic facts.

2. The case involved the assessment year 2005-06, with the original assessment determining a negative total income. The case was reopened under section 147 of the Act, resulting in the addition of a substantial amount on account of unaccounted investment. The Commissioner (Appeals) quashed the reopening, stating it was based on a mere change of opinion. The Tribunal upheld this decision, leading to the revenue's challenge.

3. The Assessing Officer sought to reopen the assessment based on discrepancies in the declared income and actual construction expenses. The Commissioner (Appeals) noted that the Assessing Officer had already examined this issue during the original assessment, forming an opinion and making no additions. Therefore, the reopening was deemed a change of opinion, not permissible under law. The Tribunal agreed with this view, dismissing the appeal. The reopening of the assessment was considered a mere change of opinion, leading to the rejection of the revenue's challenge.

In conclusion, the Tribunal's order was upheld, as it did not exhibit any legal infirmity warranting interference. The appeal was summarily dismissed based on the findings that the reopening of the assessment was not valid due to being a mere change of opinion and not supported by law.