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2020 (12) TMI 1079 - HC - Income TaxReopening of assessment u/s 147 - Revision u/s 263 - Whether Department had not produced any record to show that there was a tangible material available to reopen the assessment and more so when all the 14 lease transactions were the subject matter of block assessment, which was set aside and thereafter, it was the subject matter of the directions issued by the CIT under Section 263? - material for the CIT to exercise his jurisdiction under the said provision to deny the assessee on the deduction as well as on the depreciation claim considered by the Assessing Officer in the assessments related to the relevant assessment years - HELD THAT - Notices have been issued after getting the prior approval of the CIT. In fact, the CIT passed an order under Section 263 of the Act, which was quashed. Once over again, he granted approval for issuance of notice for reopening. The reasons for reopening were to examine the five transactions where the assessee claimed 100% depreciation. The respondents would state that the Investigation Wing of the Department made certain inquiries and investigation to verify the genuineness of the transactions relating to purchase and lease back of the machineries from the above stated parties and the corresponding claim of depreciation in respect of those assets could not be accepted. Thus, the five transactions, which have been referred to as the reasons for reopening the assessment, were, indeed, the very same transactions, which formed part of the 14 transactions, which were considered in the block assessment as well as in the proceedings under Section 263 of the Act. As perused the return of income filed by the assessee for the relevant assessment years, in which, the claim for depreciation had been disclosed. Therefore, it is clear that the assessee disclosed all material information to the Assessing Officer. There is no allegation made by the Department against the assessee that they failed to truly and fully disclose all relevant material. Thus, without any such allegation against the assessee, the Department would not be justified in reopening the assessment by exercising its power by issuing notices under Section 148 of the Act. Identical circumstances were the subject matter of the decision in the case of Smt.Mira Ananta Naik 2008 (8) TMI 800 - BOMBAY HIGH COURT wherein it was held that it was not in dispute that the block assessment was carried out and the block assessment was the subject matter of the proceedings and that notices merely stating that there was reason to believe that income chargeable to tax for the relevant assessment year escaped assessment without anything more could not be stated to be something, which would enable the Authorities to invoke Section 147 of the Act. We find that the assessee disclosed all relevant facts and the Assessing Officer considered them and after the search, which was conducted on 08.7.1996, the block assessment was framed, which was ultimately set aside. Parallelly, the regular scrutiny assessments were done under Section 143(3) of the Act and thereafter the CIT exercised his power under Section 263 of the Act and passed an order, which was also set aside. Material, which was already placed on record, and considered in earlier two rounds of litigation can hardly be a reason to reopen the assessment and all that we can say is that the attempt of the Department is to reopen a settled issue solely based upon change of opinion. The Department is silent and has not disclosed as to what is the tangible material, which is now available with them more than those that were available with the Department in the earlier two rounds of litigation. Therefore, we can safely hold that what the Department seeks to do is not to reopen the assessment, but to review the earlier orders, which had attained finality. That apart, the tax case appeals filed by the assessee having been allowed by judgment dated 03.12.2013, the decision is binding upon the Department and the same reasons, for which, the CIT exercised his power under Section 263 of the Act, cannot be used for issuing the notices for reopening. Decision of the Tribunal has to be read as a whole and the Department cannot pick and choose a few sentences and observations made by the Tribunal, which are not relatable to the assessee's case, but probably an opinion regarding the statutory provision. The Tribunal recorded a finding that the transactions were not fraudulent, that the assessee disclosed all the transactions and that all the transactions were through banking channels. Unless there is a fresh tangible material available with the Department, the question of reopening the assessments based on the material already available on record is impermissible. As pointed in the decision of the Hon'ble Supreme Court in the case of Kelvinator of India Ltd. 2010 (1) TMI 11 - SUPREME COURT what is to be borne in mind is the conceptual difference between the power of review and the power to re-assess, that the Assessing Officer has no power to review, but he has a power to reassess, that the reassessment should be based on fulfillment of certain preconditions and that if the concept of change of opinion is removed, then in the garb of reopening the assessment, review would take place. This is precisely what the Department seeks to do in the cases on hand. No hesitation to hold that the reopening of assessment is without jurisdiction, bad in law and liable to be set aside and consequently, the same is set aside.
Issues Involved:
1. Validity of notices issued under Section 148 of the Income Tax Act, 1961. 2. Allegation of change of opinion in reopening assessments. 3. Jurisdiction of the Department to reopen assessments beyond four years. 4. Impact of prior judicial decisions on the current proceedings. Detailed Analysis: 1. Validity of Notices Issued Under Section 148 of the Income Tax Act, 1961: The appeals challenge the notices issued by the second respondent under Section 148 of the Income Tax Act, 1961. The assessee, a public limited company, contended that the reopening of assessments for the years 1995-96, 1996-97, and 1997-98 was not tenable. The Department argued that the notices were issued within the permissible period of six years and were based on sufficient material gathered during investigations. However, the court found that the reasons for reopening were not disclosed to the assessee initially, and the Department's reliance on the decision of the Hon'ble Supreme Court in GKN Driveshafts (India) Ltd. Vs. ITO was misplaced as it was rendered after the notices were issued. 2. Allegation of Change of Opinion in Reopening Assessments: The assessee argued that the reopening of assessments was a clear case of change of opinion. The court noted that the transactions in question were already examined in the block assessment and in the proceedings under Section 263 of the Act, which were quashed by the Tribunal and the Division Bench of the High Court, respectively. The court emphasized that the Department did not produce any new tangible material to justify the reopening and that the reasons for reopening were based on the same transactions previously scrutinized. 3. Jurisdiction of the Department to Reopen Assessments Beyond Four Years: The court examined whether the Department had the jurisdiction to reopen assessments beyond the four-year period. It was noted that the assessments were completed on 31.3.1996, 31.3.1997, and 31.3.1998, and the notices for reopening were issued on 13.3.2002 and 04.7.2002, beyond the four-year period. The court held that unless the Department could demonstrate that the assessee failed to fully and truly disclose all material facts necessary for the assessment, the reopening was not justified. The court concluded that the Department's attempt to reopen the assessments was based on a change of opinion and not on any new material. 4. Impact of Prior Judicial Decisions on the Current Proceedings: The court reviewed the prior judicial decisions, including the Tribunal's order quashing the block assessment and the Division Bench's judgment quashing the proceedings under Section 263 of the Act. The court found that the issues raised in the reopening notices were already settled by these decisions, which had attained finality. The court emphasized that the Department's action to reopen the assessments was contrary to the binding judicial decisions and amounted to a review rather than a reassessment. Conclusion: The court held that the reopening of assessments was without jurisdiction, bad in law, and liable to be set aside. The writ appeals were allowed, and the common impugned order dated 25.1.2019 was set aside. The notices issued under Section 148 of the Act were quashed, and the connected CMPs were closed. The court's decision was based on the principles that the Department cannot reopen assessments based on a change of opinion and must adhere to the binding judicial decisions that have already settled the issues in question.
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