2018 (4) TMI 803 - HC - Income Tax

Reopening of assessment - reopening was made on the specific information from the Joint Commissioner of Income Tax, Special Range III, Mumbai, which was not available at the time of original assessment - Held that - CIT (Appeals) considered the merits of the matters and regarding the details called for by the AO, after issuance of notice u/s 148 as rightly pointed out by the CIT (Appeals) and affirmed by the Tribunal, AO has attempted to make a roving enquiry in the course of reassessment proceedings and has attempted to collect evidence to support the initiation of proceedings under Section 148 of the Act. There is no material to show as to how the Joint Commissioner of Income Tax, Special Range III, Mumbai, came to the conclusion that the value of the assets should be determined as NIL. Thus, we find that the impugned reassessment proceedings was a clear case of change of opinion and therefore, the proceedings could not have been initiated under Section 147 of the Act. There is no error or infirmity in the orders passed by the Tribunal. - Decided in favour of assessee.

Summary

Issues:
Reopening of assessment under Section 148 of the Income Tax Act for the assessment years 1995-96 and 1996-97 based on specific information, change of opinion, validity of reopening proceedings, roving enquiry during reassessment proceedings, lack of material supporting the determination of asset value as NIL by the Joint Commissioner of Income Tax.

Analysis:
The High Court of Madras considered the appeals by the Revenue against the orders of the Income Tax Appellate Tribunal for the assessment years 1995-96 and 1996-97. The main issue revolved around the justification of the Assessing Officer in reopening the assessments under Section 148 of the Income Tax Act based on a letter from the Joint Commissioner of Income Tax, Special Range III, Mumbai. The Commissioner of Income Tax set aside the reopening proceedings, citing it as a clear case of change of opinion, a finding upheld by the Tribunal.

The appellant, representing the Revenue, relied on a Supreme Court decision to support the reopening, emphasizing that the Assessing Officer had crucial information regarding asset values from the Joint Commissioner. On the other hand, the respondent, the Assessee, argued in favor of the Tribunal's decision, highlighting the elaborate exercise by the Commissioner of Income Tax (Appeals) and the lack of necessity for reopening the assessments.

The Court carefully examined the submissions from both sides and reviewed the factual matrix presented by the Commissioner of Income Tax (Appeals). It was observed that the Assessing Officer lacked concrete information to support the reopening and engaged in a roving enquiry during reassessment proceedings. Additionally, there was no substantial material indicating how the Joint Commissioner determined the asset value as NIL, leading to the conclusion that the reassessment was a clear case of a change of opinion.

Ultimately, the Court found no error in the Tribunal's orders and dismissed the Tax Case Appeals filed by the Revenue. The question of law was answered against the Revenue and in favor of the Assessee, with no costs imposed.