2019 (7) TMI 1098 - HC - Income Tax

Reopening of assessment u/s 147 - reopening on the basis of retrospective insertion of clause (i) to explanation 1 to Section 115-JB of the Act whereby provisions for diminution in the value of any asset is required to be added to the book profit for the purposes of Section 115-JB - following Jurisdiction High Court CIT(A) held that retrospective amendment in law does not give to any failure to disclose material facts as contemplated in the first proviso - HELD THAT - The question of law as proposed by the Revenue is squarely covered by the two decisions which have been referred to by the Tribunal in its impugned order. The principle of law as explained in the two decisions of this Court is that the retrospective amendment to any provision cannot be a ground for making re-assessment. Thus, the proposed question is squarely covered by the decision of this Court in the case of Vodafone West Ltd. Vs. Assistant Commissioner of Income Tax 2013 (7) TMI 536 - GUJARAT HIGH COURT and Sadbhav Engineering Ltd. 2014 (6) TMI 296 - GUJARAT HIGH COURT .

Summary

Issues Involved:
1. Validity of reopening assessment under section 147 of the Income Tax Act, 1961 based on retrospective amendment of law.

Analysis:
The High Court of Gujarat heard a Tax Appeal under Section 260A of the Income Tax Act, 1961, filed by the Revenue against the order of the Income Tax Appellate Tribunal. The main issue raised was whether the Tribunal erred in upholding the decision of the CIT(A) in quashing the reopening of assessment under section 147 of the Act based on a retrospective amendment of the law. The Tribunal, in line with the CIT(A)'s findings, held that the Assessing Officer's initiation of proceedings under section 147 solely on the grounds of a retrospective amendment did not constitute a failure to disclose material facts. The Tribunal referred to previous decisions of the Gujarat High Court in similar cases to support this view.

The High Court concurred with the Tribunal's decision, stating that the proposed question of law by the Revenue was covered by the precedents cited by the Tribunal. The Court emphasized that a retrospective amendment to any provision cannot be the sole basis for reassessment. The judgments in Vodafone West Ltd. Vs. ACIT [2013] and Sadbhav Engineering Ltd. Vs. DCIT [2014] were cited to support this principle. The Court held that the retrospective amendment did not amount to a failure to disclose material facts as required under the law for reopening assessments under section 147.

Therefore, the High Court dismissed the appeal, stating that the proposed question of law was adequately addressed by the decisions cited, emphasizing that a retrospective amendment alone cannot justify the reopening of assessments. The principle established by the Court in previous cases was reiterated, highlighting that reassessment cannot be solely based on retrospective changes in the law.