2021 (5) TMI 689 - HC - Income Tax

Reopening of assessment u/s 147 - whether the case is one of failure on the part of the writapplicant as to full and true disclosure of all the material facts for the year under consideration? - HELD THAT - Having regard to the materials on record more particularly the reasons for reopening we are of the view that the case is one of reopening based on change of opinion. It is settled position of law that when claim has already been examined at the original assessment stage then in such circumstances the Assessing Officer cannot resort to reopening more particularly to reexamine other facts on the very same claim. We are convinced that the impugned notice under Section 148 of the Act is not sustainable in law. - Decided in favour of assessee.

Summary

Issues involved:
1. Reopening of assessment under Section 143(3) of the Income Tax Act, 1961 for the assessment year 2011-12.
2. Validity of the impugned notice under Section 148 of the Act.
3. Whether the case involves failure to disclose material facts for the assessment year under consideration.

Analysis:

Issue 1: Reopening of assessment under Section 143(3) of the Income Tax Act, 1961 for the assessment year 2011-12:
The case involved a scrutiny assessment under Section 143(3) of the Income Tax Act, 1961, beyond the four-year period. The original assessment order assessed the total income at a specific amount after various additions. Notably, there was a discrepancy in the amounts added concerning transfer pricing adjustments. The petitioner challenged the reopening of the assessment.

Issue 2: Validity of the impugned notice under Section 148 of the Act:
The petitioner sought relief to quash and set aside the impugned notice under Section 148 of the Income Tax Act, 1961. The reopening was based on certain additions to be made under specific sections of the Act, including unutilized CENVAT credit and profit earned by an entity. The petitioner provided detailed submissions and justifications regarding these issues.

Issue 3: Failure to disclose material facts for the assessment year under consideration:
The key point of consideration was whether the case involved a failure on the part of the petitioner to fully and truly disclose all material facts for the relevant assessment year. The court analyzed the reasons for the reopening and concluded that it was based on a change of opinion, which is impermissible when the claim has already been examined during the original assessment.

The court held that the Assessing Officer cannot resort to reopening to reexamine other facts on the same claim if it has already been examined at the original assessment stage. Ultimately, the court found that the impugned notice under Section 148 of the Act was not sustainable in law. Consequently, the writ application was allowed, and the impugned notice was quashed and set aside.

This detailed analysis of the issues involved in the legal judgment showcases the court's reasoning and decision-making process regarding the reopening of the assessment and the validity of the impugned notice under the Income Tax Act, 1961.