2019 (1) TMI 762 - HC - Income Tax

Reopening of assessment - change of opinion - allegation that the assessee failed to fully and truly disclose all the details - Held that - CIT(A) as well as the Tribunal rightly appreciated the factual position and noted that the scrutiny assessment was taken up since the survey under Section 133A was conducted and that during such scrutiny assessment, the statement recorded from the Managing Director of the assessee was not taken into consideration by the Assessing Officer. Therefore, there was no opinion formed by the Assessing Officer on the said issue under the head of income. Further, the assessee themselves accepted that the income was earned, but not disclosed in the returns. Accordingly, the reopening was confirmed. With regard to the contention of the assessee that there was a full and true disclosure by the assessee, on facts, we find that in the instant case, the reopening has been done based on the statement given by the Managing Director of the assessee during the survey. It is not the record of the assessee that they disclosed it in the returns. Hence, on facts, the Assessing Officer, the CIT(A) and the Tribunal clearly held that the reopening was not a change of opinion, with which, we are in entire agreement - decided against the assessee.

Summary

Issues:
Validity of reassessment under Section 148 beyond four years without failure to disclose all material facts, Reopening of assessment based on statements recorded at the time of survey, Reassessment validity when reopening on the same set of materials, Charging interest under Section 234B up to the date of reassessment.

Validity of Reassessment under Section 148:
The appeals under Section 260A of the Income Tax Act challenged the common order by the Tribunal for the assessment years 2003-04 and 2004-05. The substantial questions of law raised by the assessee included the validity of reassessment beyond four years under Section 148 without any failure to disclose all material facts necessary for assessment. The contention was whether the reassessment was valid when there was no allegation of non-disclosure by the assessee. The Tribunal upheld the reopening of assessment based on statements recorded during a survey, which the assessee argued was not supported by fresh materials obtained subsequently.

Reopening of Assessment based on Survey Statements:
The core issue was whether the reopening of assessment for the years 2003-04 and 2004-05 was valid. Notices under Section 148 were issued long after the completion of scrutiny assessment, relying on a statement from the Managing Director during the survey proceedings. The assessee claimed that the reopening constituted a change of opinion without any failure to disclose details. However, both the CIT(A) and the Tribunal found that the statement from the Managing Director was not considered during the initial scrutiny assessment, leading to the confirmation of the reopening.

Disclosure of Income and Change of Opinion:
The authorities determined that the reopening was not a change of opinion as the Managing Director's statement during the survey formed the basis for reassessment. The assessee's argument of full and true disclosure was dismissed as the income in question was not disclosed in the returns but was acknowledged to have been earned. The reassessment was deemed valid based on the statement from the Managing Director, with all levels of authorities concurring that it was not a change of opinion but a necessary action based on new information.

Charging of Interest under Section 234B:
The judgment also addressed the issue of charging interest under Section 234B, questioning whether it could be levied up to the date of reassessment or only up to the date of the regular assessment. Ultimately, the tax case appeals were dismissed, with the substantial questions of law answered against the assessee, and no costs were awarded. The connected CMP was also dismissed in light of the judgment.