2020 (10) TMI 143 - AT - Income Tax

Reassessment proceedings - no objection was raised by the assessee in the course of reassessment proceedings - Decision of ld. CIT(A) that the reopening was based on mere change of opinion and hence, the order was bad in law - HELD THAT - CIT(A) has held the reassessment as bad in law on the basis of the factual and legal position obtaining in the case. Merely because the assessee did not raise any objection against the reassessment proceedings before the AO, does not mean that question of validity of reassessment has attained finality and hence cannot be challenged before the appellate forums. The quintessence of the matter is to examine as to whether or not the reassessment is valid and not whether or not any objection was taken by the assessee before the AO. It will be seen hereinafter that the ld. CIT(A) rightly quashed the reassessment as having been initiated on the basis of change of opinion only. This ground is, therefore, dismissed. Reassessment on the basis of change of opinion - case was taken up under scrutiny under Computer Aided Scrutiny Selection (CASS) to examine the claim of deduction under Chapter VI-A of the Act - claim of deduction u/s.80IB(10) - HELD THAT - It is evident from the reasons recorded by the AO that the initiation of reassessment proceedings was premised on the fact that the commencement took place at a date in variance with the one stated by the assessee in the original assessment proceedings. CIT(A) has aptly recorded that the AO in the original assessment proceedings thoroughly examined the issue of date of commencement of the project, as supported by the reproduction from the assessment order. Reassessment came to be initiated by the AO on the basis of no fresh material coming to his possession after the completion of the original assessment, which was, in fact, made only for the verification of claim of the deduction under the CASS. Rather it is a case of change of incumbent who reviewed the material existing on record and took a contrary view. Such change of opinion is strictly impermissible in the light of judgment in Kelvinator of India Ltd. 2010 (1) TMI 11 - SUPREME COURT . No reason to disturb the finding recorded by the ld. CIT(A) in coming to the conclusion that the reassessment proceedings were bad in law. The impugned order is countenanced to this extent. - Decided against revenue.

Summary

Issues:
Initiation of reassessment based on change of opinion and validity of reassessment proceedings.

Issue 1: Initiation of Reassessment

The appeal by the Revenue challenged the CIT(A)'s decision on the initiation of reassessment proceedings for the assessment year 2009-10. The CIT(A) held the reassessment as bad in law despite the assessee not raising objections during the proceedings. The new AO initiated reassessment proceedings after a change in jurisdiction, and the assessment was completed denying the deduction u/s.80IB(10). The CIT(A) found the reassessment invalid and decided in favor of the assessee. The Tribunal upheld the CIT(A)'s decision, stating that the validity of reassessment, not objections raised, is crucial. The reassessment was deemed invalid as it was based on a mere change of opinion, following the judgment in CIT Vs. Kelvinator of India Ltd. The first ground of appeal was dismissed.

Issue 2: Change of Opinion in Reassessment

The second ground of appeal focused on the quashing of reassessment due to a change of opinion. The AO initially examined the deduction claim under section 80IB(10) during the original assessment, based on documents provided by the assessee. The reassessment was initiated based on discrepancies in the commencement date of the project. However, the Tribunal found that the reassessment was solely a result of a change of incumbent's opinion, not new material. This change of opinion was deemed impermissible as per the Supreme Court's judgment in CIT Vs. Kelvinator of India Ltd. The reassessment was quashed as invalid, and there was no need to delve into the merits of the issue. The appeal was dismissed by the Tribunal.

In conclusion, the Tribunal upheld the CIT(A)'s decision to quash the reassessment proceedings due to a change of opinion and lack of fresh material. The judgment emphasized the importance of the validity of reassessment and the impermissibility of reassessment based solely on a change of opinion.