2021 (4) TMI 642 - AT - Income Tax

Reopening of assessment u/s 147 - Disallowing the appellant s claim of deduction under section 80IB(11A) - initiation of the proceeding after the expiry of 4 years from the date of completion of the relevant Assessment Year - HELD THAT - Reopening of an assessment under section 147 is not permitted merely on the ground that there is change in the view of the Assessing Officer and subsequently he believes that earlier views was incorrect particularly when the assessment order itself records that the issue was raised and was decided in favour of the assessee. In that view of the matter the reassessment proceeding in such a case will be hit by the principle of change of opinion and thus liable to be quashed. Since the assessee had truly disclosed all the relevant material facts necessary for the assessment, the preconditions for invoking the proviso of Section 147 had not been satisfied. Hence the Ld. A.O had acted wholly without jurisdiction. We find no justification in interfering with the order passed by the Learned CIT(A) in holding the decision of reassessment proceeding under section 147 of the Act for Assessment Year 2005-06 by issuing notice under section 148 of the Act as bad in law in the absence of mentioning of any allegation against the assessee in failing to disclose fully and truly the material facts in the assessment proceeding under section 143 (3) - Merely by making a statement in the reasons recorded that the assessee s claim of 100% deduction under section 801B(11A) of the Act was incorrectly allowed cannot be said to be justified in reopening the assessment. Such order, passed by the Learned CIT(A), in our considered view is without any ambiguity so as to warrant interference. Hence the order is passed in the affirmative, i.e. in favour of the assessee and against the revenue.

Summary

Issues:
1. Validity of reassessment under section 147 of the Income Tax Act, 1961 for Assessment Year 2005-06.
2. Compliance with conditions specified in section 80IB(11A) for claiming deduction.
3. Legality of initiation of proceedings under section 147 after the expiry of 4 years from the end of the relevant Assessment Year.
4. Allegation of failure to disclose fully and truly all material facts necessary for assessment.
5. Application of legal principles regarding reopening of assessment under section 147 based on change of opinion.

Issue 1: Validity of reassessment under section 147:
The appeal challenged the reassessment under section 147 for Assessment Year 2005-06. The initiation of proceedings was contested on the grounds of being bad in law, citing that the notice under section 148 was issued after the 4-year period from the end of the relevant Assessment Year. The appellant argued that the reassessment was a "change of opinion" without tangible material to support it.

Issue 2: Compliance with section 80IB(11A) conditions:
The dispute revolved around the appellant's claim of 100% deduction under section 80IB(11A) of the Act. The appellant firm maintained income from warehousing and asserted eligibility for the deduction. The Assessing Officer disallowed the claim, which was later deleted by the CIT(A). The appellant contended that all necessary documents were provided to support the claim, as reflected in the initial assessment order under section 143(3).

Issue 3: Initiation of proceedings after 4 years:
The legality of initiating proceedings under section 147 after the 4-year period was questioned. The appellant argued that without any allegation of failure to disclose material facts, the reopening of assessment was unjustified. Legal precedents were cited to support the contention that one of the conditions for taking action beyond the 4-year period was not met.

Issue 4: Allegation of failure to disclose material facts:
The appellant challenged the allegation of failure to disclose fully and truly all material facts necessary for assessment. It was argued that the reasons for issuing the notice under section 148 did not establish such failure, as required by law. Legal judgments were cited to support the argument that the reassessment proceedings were without jurisdiction.

Issue 5: Application of legal principles on change of opinion:
The judgment discussed the legal principles regarding the reopening of assessments under section 147 based on a change of opinion. Citing relevant case law, it was emphasized that reassessment cannot be solely based on a change in the Assessing Officer's view, especially when the issue was previously decided in favor of the assessee. The judgment concluded that the reassessment in this case was without jurisdiction due to the failure to satisfy the preconditions for invoking section 147.

In conclusion, the appeal was decided in favor of the assessee, dismissing the revenue's appeal against the order passed by the CIT(A). The judgment emphasized the importance of complying with legal requirements and precedents in reassessment proceedings under the Income Tax Act.