2018 (8) TMI 1730 - HC - Income Tax

Reopening the assessment u/s 147 - no scrutiny assessment done - existence of fresh tangible materials or reasons for reopening - proof of change of opinion - Held that - There was no scrutiny assessment done for the relevant assessment year and the assessment itself was under Section 143(2). The petitioner requested time to produce documents and for varied other reasons and the respondent came to a conclusion that adequate opportunity has been given and issued a notice under Section 144. The earlier Writ Petition was filed and it appears that there was no interim order and by then, the assessment order was passed under Section 144 read with Section 147. In such circumstances, the assessee cannot claim that reopening cannot be done, as there were no fresh tangible materials or reasons for reopening. If the original assessment was a scrutiny assessment under Section 143(3) of the Act, the Court might have examined as to whether there were fresh tangible material for reopening the assessment or it is a case of change of opinion. Since there was no scrutiny assessment, the question of change of opinion does not arise and therefore, the contention raised by the petitioner that the reopening of assessment is bad in law, cannot be countenanced. For the first time, the assessee has placed an explanation in respect of the information which was secured by the department, based on the annual information return received from the Bank and Sub-Registrar s office, which shown deposit of cash and purchase of immovable property. In addition there to, the return disclosed the receipt of agricultural income for which documents have been called for etc. Thus, the reopening of the assessment under Section 147 of the Act is perfectly legal and valid. - decided against assessee

Summary

Issues:
Challenge to the proceedings of reopening assessment under Section 147 of the Income Tax Act for the assessment year 2013-14.

Analysis:
The petitioner, an individual assessee, challenged the respondent's proceedings of reopening the assessment under Section 147 of the Income Tax Act for the assessment year 2013-14. The petitioner filed the return of income on 30.12.2014, declaring total income and net agricultural income. The respondent issued notices proposing to reopen the assessment, stating that income chargeable to tax had escaped assessment. The petitioner, along with her representative, appeared before the respondent, submitted details, and requested time for filing required documents. Despite multiple notices and requests for documents submission, the petitioner failed to comply fully. The respondent completed the assessment under Section 144 read with Section 147 of the Act, leading to the filing of the Writ Petition challenging the proceedings. The court set aside the assessment order, directing the respondent to furnish reasons for reopening the assessment, which was communicated to the petitioner. The petitioner's objection to the reasons was rejected, leading to the current Writ Petition.

The petitioner contended that the notice issued under Section 143(2) was barred by limitation and that reopening was based on details from the return of income without new material. The petitioner argued that since the return showing agricultural income was accepted, invoking Section 147 for reassessment was illegal as it amounted to a mere change of opinion without tangible material for reopening.

The Court noted that no scrutiny assessment under Section 143(3) was done, and based on information received, the respondent initiated reassessment proceedings under Section 148. The Court found that there was no dispute regarding the factual findings and that the assessment was under Section 143(2) without scrutiny. The petitioner's requests for time and documents were considered, leading to the issuance of a notice under Section 144. The Court held that since there was no scrutiny assessment, the question of change of opinion did not arise, and the contention that reopening was illegal was dismissed.

The Court observed that the assessee provided an explanation regarding the information obtained by the department, including cash deposits and property purchases. Considering the facts, the Court deemed the reopening of assessment under Section 147 as legal and valid, directing the petitioner to cooperate in the assessment proceedings. Consequently, the Writ Petition was dismissed without costs, and connected Miscellaneous Petitions were closed.