2018 (12) TMI 1517 - HC - Income Tax

Reopening of assessment u/s 147 - mere change of opinion - Held that - For initiating a proceeding under section 147, the scrutiny assessment having been carried out, the limitation would be applicable, is the contention of the assessee. We need not go into this controversy since we have found that the block assessment could have taken note of and took note of the bank transactions, the details of which were obtained from the banks, on specific directions based on the partial details of such accounts recovered on search. As a matter of fact the bank transactions in its entirety were noticed by the AO who carried out the block assessment and decided to treat it as inclusive of professional income. The attempt of the next incumbent officer who issued notice under section 148, is a mere change of opinion. We hence refuse to answer the second question of law framed by us for reason of the answer to the first having decided the appeals. The first question, on the reasoning above of mere change of opinion is answered in favour of the assessee and against the Revenue. We deem it fit, on the answer given by us, to allow the appeals thus setting aside the proceedings initiated, under section 148 read with section 147, against the assessee.

Summary

Issues Involved:
1. Sustaining reassessment under section 147 of the Income-tax Act.
2. Validity of reassessment initiated after four years when the original assessment was under section 158BC read with section 143(3).

Detailed Analysis:

1. Sustaining Reassessment under Section 147:

The primary issue was whether the Tribunal was correct in sustaining the reassessment under section 147, considering the reassessment was based on bank transactions already considered in the block assessment. The court observed that the reassessment was initiated based on the opinion that the bank transactions were not treated as undisclosed income during the block assessment. However, it was noted that these bank transactions were already considered, and some explanations provided by the assessee were accepted by the Assessing Officer (AO). The AO had treated the amounts credited in the bank accounts as inclusive of professional income and only unexplained investments were treated as undisclosed income. Thus, the reassessment was deemed to be based on a mere change of opinion by the subsequent AO, which is not permissible.

2. Validity of Reassessment Initiated After Four Years:

The second issue was whether the reassessment initiated after four years could be sustained, given that the original assessment was under section 158BC read with section 143(3). The court highlighted that the details of the bank accounts were available with the AO before the expiry of four years from the last date of the assessment year. It was noted that the block assessment had already taken these details into account. The court referred to precedents, emphasizing that reassessment based on the same facts considered during the original assessment constitutes a change of opinion, which is not valid grounds for reassessment under section 147. Additionally, the court noted that if the AO had any reservations about the bank details, a proceeding under section 148 could have been initiated at the time of the block assessment itself.

Conclusion:

The court concluded that the reassessment under section 147 was not sustainable as it was based on a mere change of opinion. The details of the bank accounts were already considered during the block assessment, and the reassessment initiated after four years was not justified. Consequently, the court set aside the proceedings initiated under section 148 read with section 147 against the appellant-assessee. The judgment emphasized the importance of not allowing reassessment based on a change of opinion and upheld the principles of finality in assessments.