2019 (7) TMI 1321 - AT - Income Tax

Reopening of assessment u/s.147 - difference in gross receipt in TDS credit(26AS) and profit loss Account - AO vide order u/s.143(3)/154 rectified the discrepancy in the order u/s.143(3) - on same ground notice u/s 148 was issued - change of opinion - no fresh information came to the knowledge of the AO - HELD THAT - Revenue department wanted to initiate the proceedings both u/s.147 as well as u/s.154 which itself has established that the information as well as the accounts were very much on record which were very much in the notice of the AO as he wanted to invoke the provisions of section 154 to rectify the mistake. Because the AO had issued notice u/s.154 therefore it was also not in dispute that the alleged discrepancies were nothing but mistake apparent from record. Considering the peculiar situation under which the proceedings were started u/s.147/148 hereby hold that the law does not permit a settled issue to get unsettled by reopening the same I also find that law relating to change of opinion being not permissible for invoking proceedings u/s 147 of the Act is now well settled in the case of Kelvinator of India Ltd. 2010 (1) TMI 11 - SUPREME COURT . In this case on the basis of change of opinion the Assessing officer has resorted to section 147 in reopening of assessment and therefore quash the reassessment proceedings u/s.147 and allow this ground of appeal of assessee.

Summary

Issues Involved:
1. Justification of confirming the reopening of assessment u/s.147 of the Act by the Commissioner of Income Tax(Appeals).

Detailed Analysis:

Issue 1: Justification of confirming the reopening of assessment u/s.147 of the Act by the Commissioner of Income Tax(Appeals)

The appeal was filed by the assessee against the order of the Commissioner of Income Tax(Appeals) for the assessment year 2007-08. The primary contention in Ground No.1 of the appeal was the confirmation of the reopening of assessment u/s.147 of the Act by the Commissioner of Income Tax(Appeals). The case involved a firm deriving income from trading in fertilisers, pesticides, and commission income. The initial assessment was completed u/s.143(3) of the Act, with subsequent rectifications. The notice u/s.148 was issued on the grounds of alleged suppression of income by the assessee firm.

In response to the notice u/s.148, the assessee requested to treat the return filed u/s.139(1) as a valid return. The Assessing Officer then issued a notice u/s.143(2) and determined the total income at a revised amount. The assessee, aggrieved by the reopening of assessment and the subsequent order, appealed to the CIT(A), who upheld the Assessing Officer's action. The appeal was then brought before the Tribunal.

During the proceedings, the assessee challenged the reopening of assessment u/s.147, arguing that no new material had come to the knowledge of the Assessing Officer post the original assessment. The contention was that the reasons recorded did not indicate any fresh information warranting the exercise of jurisdiction under section 147/148 of the Act. The argument was supported by citing the decision of the Hon'ble apex Court in CIT v. Kelvinator of India Ltd., emphasizing the importance of "reason to believe" and the need for tangible material to establish income escapement.

The Assessing Officer, on the other hand, defended the reopening, stating that the production of books of account and other details during the assessment proceedings did not hinder the initiation of reassessment proceedings if all legal conditions were met. The Assessing Officer believed that the conditions for initiating reassessment proceedings were satisfied in this case, justifying the reopening of assessment u/s.147 of the Act.

After hearing both sides, the Judicial Member of the Tribunal analyzed the arguments and referred to the previous rectification order under section 154 of the Act. The Member concluded that the reassessment order was a change of opinion without fresh information justifying the reopening. Citing the settled law on the impermissibility of invoking proceedings u/s.147 based on a change of opinion, the Member quashed the reassessment proceedings u/s.147 of the Act, allowing the appeal of the assessee. Consequently, other grounds taken by the assessee on merits became irrelevant due to the legal ground on which the reassessment proceedings were quashed.

In conclusion, the Tribunal allowed the appeal of the assessee, pronouncing the order on 24/07/2019.