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2020 (1) TMI 563 - HC - Income TaxReopening of assessment u/s 147 - 'reason to believe' or 'reason to suspect' - objections of the petitioner were rejected by a non-speaking and cryptic order - information already available on record - HELD THAT - Provisions of Section 147 confers the power upon the Assessing Officer to reopen an assessment and the said power has to be exercised only if there are reasons to believe that any income chargeable to tax has escaped assessment, meaning thereby, existence of the reasons and formation of the believe on the basis of such reasons, is an essential condition for invoking provisions of Section 147. The reasons to believe is not the same thing as the reasons to suspect as has been held in the case of Das Friends Builder Private Limited v/s DCIT 2005 (8) TMI 38 - ALLAHABAD HIGH COURT . A similar view has been taken by the Delhi High Court in the case of Ashok Kumar Singh v/s CIT 1980 (7) TMI 41 - DELHI HIGH COURT and in the case of CIT v/s Kelvinator India Limited 2002 (4) TMI 37 - DELHI HIGH COURT . In the present case, there was no suppression on the part of the assessee and merely because there is a change in opinion, reopening could not have been done in the manner and method it has been done in the present case. There was no additional material for formation of the believe as contemplated under Section 147 - Decided in favour of assessee.
Issues:
1. Reopening of assessment under Section 147 of the Income Tax Act, 1961 without proper reasons. 2. Requirement of approval from the Joint Commissioner for reopening the assessment. 3. Dismissal of objections raised by the petitioner regarding the reopening of assessment. 4. Interpretation of the term 'reasons to believe' under Section 147 of the Act. 5. Validity of reassessment proceedings initiated against the petitioner. Analysis: Issue 1: Reopening of assessment under Section 147 without proper reasons The petitioner, a Private Limited Company, filed a return for the assessment year 2015-16 but later received a notice under Section 148 of the Income Tax Act, 1961 for reassessment. The petitioner raised objections, including lack of fresh information for reopening and absence of approval from the Joint Commissioner. The respondent initiated proceedings under Section 147 without disclosing reasons for reopening, leading to a challenge by the petitioner. Issue 2: Requirement of approval from the Joint Commissioner The petitioner contended that the reassessment was invalid as no approval was obtained from the Joint Commissioner. The respondent argued that the Department followed statutory provisions and had the authority to reopen the case under Section 147. The petitioner sought to quash the impugned order and notice, emphasizing the necessity of proper approval for reopening assessments. Issue 3: Dismissal of objections raised by the petitioner The objections raised by the petitioner were dismissed by a non-speaking and cryptic order, stating that the case was reopened based on information possessed by the Assessing Officer. The petitioner argued against the reopening without fresh information and challenged the validity of the reassessment proceedings. Issue 4: Interpretation of the term 'reasons to believe' under Section 147 The Court emphasized that 'reasons to believe' under Section 147 should not be equated with 'reasons to suspect.' Citing legal precedents, the Court highlighted the necessity of fresh material for forming a belief under Section 147. The reassessment based solely on a change of opinion without additional material was deemed improper. Issue 5: Validity of reassessment proceedings Considering the lack of suppression by the assessee and the absence of additional material for forming a belief under Section 147, the Court set aside the impugned order dated 13.08.2019. The Income Tax Officer was directed to proceed afresh against the petitioner in accordance with the law, allowing the writ petition in favor of the petitioner. This detailed analysis highlights the key legal issues surrounding the judgment, focusing on the procedural irregularities in the reassessment process and the legal interpretations of relevant sections of the Income Tax Act, 1961.
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