2019 (8) TMI 985 - AT - Income Tax

Reopening of assessment u/s 148 - validity of reasons to believe - HELD THAT - AO has reopened assessment beyond the period of four years from the end of relevant assessment year. AO has power to reopen the assessment after the expiry of four years from the end of relevant assessment year if, the income has escaped assessment by reason of failure on the part of assessee to disclose fully and truly all material facts necessary for the assessment for that assessment year. In the instant case, we observe that reassessment proceedings have been initiated by the Assessing Officer on reappreciation of facts and documents already on record. In the instant case, we find that the AO has resorted to provisions of section 148/147 merely on change of opinion after reappreciation of facts that were available before him in proceedings u/s. 143(3) of the Act. We find no reason to interfere with the well reasoned findings of First Appellate Authority. Accordingly, the impugned order is upheld and the appeal of Revenue is dismissed sans merits. reappreciation of facts that were available before him in proceedings u/s. 143(3) of the Act. We find no reason to interfere with the well reasoned findings of First Appellate Authority. Accordingly, the impugned order is upheld and the appeal of Revenue is dismissed sans merits.

Issues:
Reopening of assessment beyond the four-year period under section 147/148 - Validity of reasons for reopening - Addition made on account of difference in receipts of sundry debtors - Challenge to the reopening of assessment based on change of opinion - Application of proviso to section 147 - Proper exercise of Assessing Officer's power to reassess.

Analysis:
The appeal before the Appellate Tribunal ITAT Pune concerned the validity of the reopening of assessment for the assessment year 2007-08. The Assessing Officer had reopened the assessment beyond the four-year period under section 147/148, making an addition on account of a difference in receipts of sundry debtors. The main contention was whether the reassessment was based on a mere change of opinion by the Assessing Officer or if there was a valid reason for reopening. The Assessee argued that the reassessment was initiated solely to cover alleged deficiencies in the original assessment order and that all material facts were disclosed during the scrutiny assessment. The Assessee further contended that the reassessment was unjustified as it was not due to any failure on their part to disclose relevant information. The Department, on the other hand, defended the Assessing Officer's actions, stating that the issue of sundry debtors could not be considered during the original assessment due to a lack of documentary evidence. The Department sought to reverse the findings of the Commissioner of Income Tax (Appeals) on the reopening of the assessment.

Upon considering the submissions and examining the facts, the Tribunal noted that the Assessing Officer had indeed reopened the assessment beyond the prescribed period and without any failure on the Assessee's part to disclose material facts. The reasons recorded for reopening indicated that the Assessing Officer sought to disallow an amount related to sundry debtors, leading to an alleged escapement of income. However, the Tribunal found that the reassessment was based on a mere change of opinion by the Assessing Officer, rather than any non-disclosure by the Assessee. The Tribunal emphasized that the provisions of section 147/148 were not intended to rectify errors caused by the Assessing Officer's negligence and that reopening assessments after the four-year period required stricter adherence to the law. Therefore, the Tribunal upheld the findings of the Commissioner of Income Tax (Appeals) and dismissed the appeal of the Revenue, ruling that the reassessment was unjustified and lacked merit.

In conclusion, the Tribunal held that the reassessment beyond the four-year period was not justified, as it was based on a change of opinion rather than any failure on the Assessee's part to disclose material facts. The Tribunal emphasized the importance of adhering to the provisions of section 147/148 and upheld the decision of the Commissioner of Income Tax (Appeals) to reject the reassessment. As a result, the appeal of the Revenue was dismissed.

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