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2020 (4) TMI 391 - AT - Income TaxValidity of reopening of assessment - change of opinion - Whether no tangible information has come into the possession of AO pursuant to the assessment made u/s 143(3) which is rationale and bear a direct nexus to the material on which recent belief is based? - HELD THAT - Section 147 of the Act has been made without any tangible material, but on pursuant of the same material which were available before the Assessing Officer at the time of framing of the original assessment. AO was explained during the course of original assessment vide letter dated 11.12.2012 to show that such loss is not speculative in nature. Further it was also pointed out to the Assessing Officer that similar claim of the assessee was duly accepted in proceedings under Section 143(3) of the Act for assessment year 2009-10. Departmental Representative could not show us any tangible material. The Hon ble Supreme Court in the case of Kelvinator of India Ltd. Vs. CIT 2010 (1) TMI 11 - SUPREME COURT has held that even the change of opinion can be arrived for re-opening provided there is a beneficial material coming into the possession of the Assessing Officer showing that there was an escapement of income from assessment and such tangible material must have an alive link with the formation of the belief. In the present case such criteria is absent. Thus, we do not find any infirmity in the order of the learned CIT (Appeals) and the same is confirmed. Hence, appeal of the Assessing Officer is dismissed.
Issues Involved:
1. Jurisdiction of the Assessing Officer for initiating reassessment proceedings under Section 147 of the Income Tax Act. 2. Validity of the reasons recorded for reopening the assessment. 3. Whether the reassessment proceedings amounted to a mere "change of opinion." Detailed Analysis: 1. Jurisdiction of the Assessing Officer for initiating reassessment proceedings under Section 147 of the Income Tax Act: The primary issue raised was the jurisdiction of the Assessing Officer (AO) to initiate reassessment proceedings under Section 147. The assessee argued that the reopening was based on the same material facts already considered during the original assessment under Section 143(3), and thus, it amounted to a "change of opinion," which is impermissible under the law. The CIT (Appeals) held that the reopening was invalid as it was based on the same facts and did not involve any new tangible material. The Tribunal upheld this view, confirming that the AO lacked jurisdiction to reopen the assessment based on a mere change of opinion. 2. Validity of the reasons recorded for reopening the assessment: The AO recorded reasons for reopening the assessment, stating that the loss on forward contracts was speculative and not a business loss. The assessee contended that these reasons were based on the same material facts already considered in the original assessment and did not involve any new information. The CIT (Appeals) found that the reasons recorded by the AO did not disclose any fresh or tangible material and were merely a review of the original assessment order. The Tribunal agreed, noting that the AO's reasons were based on the same material available during the original assessment and did not meet the requirement of "tangible material" necessary for reopening an assessment. 3. Whether the reassessment proceedings amounted to a mere "change of opinion": The assessee argued that the reassessment proceedings were based on a change of opinion, as the AO had already considered and accepted the treatment of the loss on forward contracts during the original assessment. The CIT (Appeals) and the Tribunal both held that the reassessment was indeed based on a change of opinion, which is not permissible under the law. The Tribunal cited the Supreme Court's decision in Kelvinator of India Ltd. Vs. CIT, which held that a mere change of opinion does not justify reopening an assessment unless there is tangible material indicating escapement of income. Conclusion: The Tribunal concluded that the AO's reopening of the assessment was invalid as it was based on a mere change of opinion without any new tangible material. The reassessment proceedings were quashed, and the order of the CIT (Appeals) annulling the reassessment was upheld. The appeal of the AO was dismissed.
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