2019 (2) TMI 539 - HC - Income Tax

Reopening of assessment - notice beyond the period of four years from the end of relevant assessment year - assessee s claim of custom duty paid on imports of SCADA - Held that - The entire issue of the assessee s claim of custom duty paid on imports of SCADA was examined by the Assessing Officer in the original assessment proceedings. Despite this, if the AO was in possession of information then not available to him, sufficient to enable him to form a belief that income chargeable to tax had escaped assessment, reopening of assessment that too beyond the period of four years could still be resorted to. In the present case the entire information or material which the Assessing Officer now seeks to place reliance upon, was before him during the original assessment. This fact was brought to his notice in a detail reply filed by the assessee to the queries raised by the Assessing Officer in which assessee referred the entire investigation of the Custom Department leading to the filing of declaration under KVSS. The Assessing Officer, therefore, did not have any new or additional material on which the impugned notice was based. - Revenue appeal dismissed.

Summary

Issues:
Validity of reopening of assessment in case of the respondent assessee.

Analysis:
The case involved an appeal by the Revenue against the judgment of the Income Tax Appellate Tribunal regarding the validity of reopening the assessment for the respondent assessee. The Assessing Officer had examined the assessee's claim of expenditure on custom duty during the original assessment proceedings for the assessment year 1999-00. The Assessing Officer issued a notice to reopen the assessment based on information from the Customs Department regarding duty payment on components imported by the assessee through another entity. The Tribunal held the reopening notice invalid, deeming it a change of opinion as the issue had been previously examined.

Upon review, the High Court noted that the reopening of assessment was done beyond the four-year period from the relevant assessment year. Despite the Assessing Officer's possession of information during the original assessment, if new information was available to form a belief of escaped income, reopening could be justified. However, in this case, the material the Assessing Officer sought to rely on was already known during the original assessment. The assessee had provided detailed responses referencing the Customs Department's investigation and the declaration under the Kar Vivad Samadhan Scheme. As the Assessing Officer lacked new or additional material for the reopening, the appeal was dismissed, affirming the Tribunal's decision.

This detailed analysis highlights the key points of the judgment, emphasizing the importance of new information for the validity of reopening assessments beyond the statutory period. The court's decision underscores the need for fresh material to support reopening assessments and prevent arbitrary changes based on previously examined issues.