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2018 (2) TMI 1646 - AT - Income TaxReopening of assessment - sale of scrap and miscellaneous income - mere change of opinion - change of opinion in a completed assessment u/s 143(3)- Held that - Since in the instant case no new tangible material was available with the Assessing Officer and such re-assessment is based on the same materials as were available during the original proceedings since the issue of sale of scrap and miscellaneous income was considered by the AO in the body of the assessment order therefore the action of the Assessing Officer in my opinion is a mere change of opinion in a completed assessment u/s 143(3) and therefore find merit in the order of the ld. CIT(A) quashing such reassessment proceedings. The ld. DR also could not bring any material so as to take a contrary view than the view taken by the ld. CIT(A) nor could point out any in consistency in the order of ld. CIT(A). - Decided against revenue.
Issues Involved:
1. Reopening of Assessment under Section 147. 2. Validity of Reassessment Proceedings. 3. Claim of Deduction under Section 80IC. Issue-wise Detailed Analysis: 1. Reopening of Assessment under Section 147: The primary issue in this case revolves around whether the Assessing Officer (AO) was justified in reopening the assessment under Section 147 of the Income Tax Act. The original assessment was completed under Section 143(3) on 16.12.2011. The AO later reopened the assessment, citing that the assessee had claimed an excess deduction under Section 80IC on 'income from sale of scrap' and 'miscellaneous income,' which were not directly derived from the manufacturing activity. The AO believed that this led to an income escapement of ?41,48,678. 2. Validity of Reassessment Proceedings: The reassessment proceedings were challenged by the assessee on the grounds of lack of tangible material. The CIT(A) concluded that the reopening was void ab initio because it was based on a mere review of the same materials that were already considered during the original assessment. The CIT(A) observed that the AO did not have any new tangible material to justify the reopening, making it a case of 'change of opinion,' which is not permissible under the law. The CIT(A) relied on judicial precedents, including the Supreme Court's decision in CIT vs. Kelvinator India Ltd., which mandates that reopening must be based on new tangible material and not merely a change of opinion. 3. Claim of Deduction under Section 80IC: The AO's contention was that the income from the sale of scrap and miscellaneous income was not directly derived from manufacturing activity and, therefore, not eligible for deduction under Section 80IC. However, the CIT(A) noted that this issue was already considered and accepted in the original assessment. The CIT(A) emphasized that the absence of new tangible material for reopening the assessment indicates that the AO was merely reviewing the original assessment, which is not allowed. Conclusion: The Tribunal upheld the CIT(A)'s order, quashing the reassessment proceedings. It was concluded that the AO's action was a mere change of opinion based on the same materials available during the original assessment. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the Revenue's appeal. The reassessment proceedings were deemed invalid as they were not based on any new tangible material, aligning with the judicial principle that the AO does not have the power to review an assessment without new information. Order: The appeal filed by the Revenue was dismissed, and the reassessment proceedings were quashed. The order was pronounced in the open Court on 22nd February 2018.
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