2021 (3) TMI 487 - HC - Income Tax

Reopening of assessment u/s 147 - Reasons to believe - whether the revenue is justified in reopening the assessment for the year A.Y. 2014-15 ? - HELD THAT - It is a settled principle of law that, a mere fresh application of mind to the same set of facts or mere a change of opinion does not confer jurisdiction upon the Assessing Officer to issue notice under Section 148 of the Act. A perusal of the reasons recorded, it reveals that, the assessment is sought to be reopened mainly on the ground that, the assessee was failed to disclose the VAT refund in his return of income which has resulted into under assessment of income . Considering the scrutiny assessment order, it appears that, the assessee had disclosed fully and truly all primary material facts with regard to VAT amount and accordingly, the then assessing officer had framed the assessment. When there was no any failure on the part of the assessee to disclose fully and truly material facts for the purpose of relevant assessment, now it is not open to change that opinion on the very same set of facts which were available at the time of original assessment. Therefore, in the present case, the reasons recorded by the assessing officer led to belief about the escapement of assessment is nothing, but mere a change of opinion, which cannot sustainable in law. It is not the case of the revenue that, subsequently i.e. after the order of scrutiny assessment, the assessing officer has received tangible material to come to the conclusion that, there is escapement of income. We have also examined the aspect whether any tangible material exists or not. We do not find any tangible material in the hands of the assessing officer to form a prima facie opinion that, the income has escaped assessment. Therefore, in the present case, in the absence of element of non-disclosure of relevant materials fully and truly necessary for assessment, the assessing officer has no right to reopen the assessment. - Decided in favour of assessee.

Summary

Issues Involved:
1. Legality of the notice issued under Section 148 of the Income Tax Act, 1961 for reopening the assessment.
2. Examination of whether the reopening of assessment was based on a change of opinion.
3. Evaluation of whether there was a failure to disclose material facts by the assessee.

Detailed Analysis:

1. Legality of the Notice Issued Under Section 148 of the Income Tax Act, 1961:
The writ applicant challenged the notice dated 27.03.2019 issued by the respondent under Section 148 of the Income Tax Act, 1961, seeking to reopen the applicant’s income tax assessment for the Assessment Year (A.Y.) 2014-15. The applicant contended that the notice was illegal, bad in law, barred by limitation, and without jurisdiction. The primary ground for reopening the assessment was the alleged non-disclosure of VAT refund amounting to ?79,78,941/- during the year under consideration.

2. Examination of Whether the Reopening of Assessment Was Based on a Change of Opinion:
The applicant argued that the issue of VAT refund was already examined during the original assessment under Section 143(3) of the Act. The original assessment had added only a differential amount of ?10,41,320/- to the income, which was later deleted by the Income Tax Appellate Tribunal. The applicant contended that the reassessment was based on a mere change of opinion, which is not permissible. The court referred to the judgment in the case of CIT Vs. Kelvinator of India Ltd., which held that reopening of assessment based on a mere change of opinion is not valid. The court emphasized that the Assessing Officer has no power to review but only to reassess, and reassessment must be based on tangible material indicating escapement of income.

3. Evaluation of Whether There Was a Failure to Disclose Material Facts by the Assessee:
The court found that during the original assessment, the issue of VAT refund was thoroughly examined, and the assessee had disclosed all primary material facts. The court noted that the reasons recorded for reopening the assessment were based on the same set of facts available during the original assessment. The court concluded that there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. Therefore, the reopening of the assessment was deemed to be based on a mere change of opinion, which is not sustainable in law.

Conclusion:
The court held that the notice issued under Section 148 of the Income Tax Act, 1961, for reopening the assessment was without authority of law. The court quashed and set aside the impugned notice dated 27.03.2019, allowing the writ application. The court reiterated that reassessment based on a mere change of opinion is not permissible, and there must be tangible material indicating escapement of income to justify reopening the assessment.