2020 (2) TMI 95 - HC - Income Tax

Reopening of assessment u/s 147 - issue of notice for reopening beyond the period of four years - HELD THAT - There was no failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment. We are of the view that the case on hand is one of change of opinion. There is hardly anything on record to indicate that there was failure on the part of the assessee to disclose truly and fully all material facts. There was no tangible material available for the purpose of issuing the notice for reopening beyond the period of four years. The impugned notice under Section 148 of the Act, 1961 is not sustainable in law. - Decided in favour of assessee.

Summary

Issues Involved:

1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961 for reopening the assessment beyond four years.
2. Alleged failure of the assessee to disclose fully and truly all material facts necessary for assessment.
3. Change of opinion by the Assessing Officer as a basis for reopening the assessment.

Detailed Analysis:

1. Validity of the Notice Issued Under Section 148:

The writ applicant challenged the notice dated 26th March 2018 issued under Section 148 of the Income Tax Act, 1961 for the assessment year 2011-12, claiming it was issued beyond the statutory period of four years. The applicant contended that there was no failure on their part to disclose fully and truly all material facts necessary for the assessment. The Court noted that the reopening was based on a reanalysis of existing material, which constituted a change of opinion and was not permissible. The Court held that the impugned notice under Section 148 was not sustainable in law and quashed it.

2. Alleged Failure to Disclose Material Facts:

The Assessing Officer had issued the notice for reopening on the grounds that the assessee had not correctly apportioned the administrative expenses between the tea business and the windmill business, thereby artificially inflating the income eligible for deduction under Section 80IA. However, the Court found that the assessee had maintained and presented full separate accounts for both divisions during the original assessment. The Court referenced a previous judgment (Special Civil Application No. 4005 of 2016) where it was held that there was no failure on the part of the assessee to disclose truly and fully all material facts. Consequently, the Court concluded that there was no tangible material available to justify the reopening of the assessment beyond the period of four years.

3. Change of Opinion:

The Court emphasized that the case at hand was one of change of opinion. The original assessment had already considered all the relevant material facts, and the reassessment was sought based on a reanalysis of the same material. The Court reiterated that a change of opinion does not constitute a valid ground for reopening an assessment. The Court held that the Assessing Officer's actions were not justified as there was no new information or material that indicated any income had escaped assessment.

Conclusion:

The Court allowed the writ application, quashing the impugned notice for reopening the assessment under Section 148 of the Income Tax Act, 1961. All consequential proceedings pursuant to the notice were terminated, and the rule was made absolute.