2021 (4) TMI 738 - AT - Income Tax

Reopening of assessment u/s 147 - re-opening is beyond the period of four years - HELD THAT - It is a clear case of change of opinion and hence the re-opening of assessment based on mistake of opinion is bad in law. Even otherwise the re-opening is beyond the period of four years and the original assessment was completed u/s 143(3) of the Act on 08.12.2011. In the reasons recorded, there is no whisper that the assessee has failed to disclose truly and fully all material facts required for assessment. In the absence of such an allegation the reopening is bad in law as the proviso to Section 147 comes into play. - Decided in favour of assessee.

Summary

Issues:
1. Validity of re-opening of assessment under Section 147.
2. Allegation of change of opinion by the Assessing Officer.
3. Compliance with the provisions of Section 147 regarding the period of re-opening.
4. Application of the proviso to Section 147 for failure to disclose material facts.

Analysis:
1. The appeal was filed by the Revenue against the order of the CIT(A) challenging the validity of re-opening the assessment under Section 147. The CIT(A) held that the re-opening of the assessment was bad in law. The Revenue contested this finding, leading to the appeal before the Appellate Tribunal.

2. The reasons for re-opening the assessment were based on the compensation received for the premature termination of lease agreements. The Assessing Officer claimed that the compensation should be treated as rental income from the leased property, leading to an under-assessment of income. However, the CIT(A) observed that the Assessing Officer had already examined and accepted the claim of the assessee regarding the compensation as a capital receipt during the original assessment. The CIT(A) concluded that the re-opening was merely a change of opinion, which is not a valid ground for re-assessment.

3. The Appellate Tribunal upheld the CIT(A)'s order, emphasizing that the re-opening was beyond the four-year period and did not involve any failure by the assessee to disclose material facts required for assessment. The absence of such an allegation rendered the re-opening bad in law, invoking the proviso to Section 147.

4. The Tribunal concurred with the CIT(A) that the re-opening was solely based on a change of opinion by the Assessing Officer, which is impermissible under the law. The Tribunal dismissed the Revenue's appeal, affirming the order of the CIT(A) and holding that the re-opening of the assessment was unjustified and not in accordance with the provisions of the Income Tax Act.

In conclusion, the Appellate Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s order that the re-opening of the assessment was invalid due to being a mere change of opinion by the Assessing Officer and exceeding the permissible period under Section 147 without any failure to disclose material facts by the assessee.