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2020 (12) TMI 991 - HC - Income TaxReopening of assessment u/s 147 - whether original assessment framed did not deal with the issue of exemption of sale of agricultural land? - as per AO as assessee had cooperated in the re-assessment proceedings and therefore, cannot object to the reopening - HELD THAT - For validity of the reopening proceedings, we find that the reopening was made based on the facts, records and documents, which were available on the file of the Assessing Officer when the original assessment was completed. AO miserably failed to establish that the assessee had failed to disclose fully and truly all material facts necessary for the assessment for that year. The CIT(A) states that the Assessing Officer during the original assessment did not properly appreciate the documents. As held by the Hon'ble Supreme Court in Calcutta Discount Co. Ltd. 1960 (11) TMI 8 - SUPREME COURT it is not for the assessee to tell as to how the Assessing Officer has to complete his assessment. The duty of the assessee is to disclose fully and truly all material particulars and it is not for him to advice the Assessing Officer to how he has to go about with the assessment proceedings. Having noted that the assessee, at the first instance, sought for furnishing the reasons for reopening, would clearly show that non-furnishing of reasons has put him to prejudice. As noted above, the Revenue could not produce any evidence to show that the reasons recorded were provided to the assessee in spite of opportunity having been granted by the Tribunal. Thus, we find that the Tribunal was right in allowing the assessee's appeal and quashing the re-assessment proceedings.
Issues Involved:
1. Whether the Tribunal was right in granting relief to the assessee by holding that the reopening of assessment under Sec.147 was not proper, especially when the original assessment framed did not deal with the issue of exemption of sale of agricultural land? 2. Whether on the facts and in the circumstances of the case the Tribunal was right in holding that the reopening of the assessment was not proper? Detailed Analysis: Issue 1: Validity of Reopening of Assessment under Sec. 147 The Revenue contended that the reopening of the assessment was justified as the original assessment did not address the exemption of the sale of agricultural land. The Assessing Officer (AO) issued a notice under Section 148 of the Income Tax Act on 28.03.2013, alleging that excessive relief had been granted to the assessee due to a wrong appreciation of facts. The assessee objected, arguing that the reasons for reopening were not communicated despite requests, making the reassessment invalid. The Tribunal supported the assessee, stating that the reasons for reopening were not communicated, thus invalidating the reassessment. Issue 2: Communication of Reasons for Reopening The Tribunal found that the Revenue failed to provide evidence that the reasons for reopening were communicated to the assessee, despite opportunities. The Tribunal relied on the High Court of Bombay's decision in CIT vs. Videsh Sanchar Nigam Ltd. and the decision in Jayanthi Natarajan v. Assistant Commissioner of Income Tax, which emphasized the necessity of communicating reasons for reopening to the assessee. The Tribunal ruled that the reassessment was invalid due to non-communication of the reasons. Section 292BB and Natural Justice The Revenue argued that under Section 292BB of the Act, the reassessment proceedings were valid as the assessee participated in the proceedings. However, the court noted that Section 292BB does not apply when there is a total absence of notice. The Supreme Court's decision in GKN Driveshafts (India) Ltd. mandates that reasons for reopening must be communicated to the assessee, who can then object. The court held that non-communication of reasons prejudiced the assessee, making the reassessment invalid. Change of Opinion The court found that the reassessment was based on existing records and documents, indicating a change of opinion rather than new tangible material. The Supreme Court in Kelvinator of India Limited highlighted that reassessment must be based on new material, not merely a change of opinion. The Tribunal was correct in concluding that the reassessment was invalid due to the absence of new material and the failure to communicate reasons. Conclusion The court dismissed the Revenue's appeal, affirming the Tribunal's decision that the reassessment proceedings were invalid. The substantial questions of law were answered against the Revenue, emphasizing the importance of procedural fairness and the necessity of communicating reasons for reopening assessments.
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