2021 (8) TMI 571 - HC - Income Tax

Reopening of assessment u/s 147 - Denial of natural justice - HELD THAT - Absolutely, there is no dispute regarding the proposition of law relied on by both the respective counsel regarding the judgments cited. Principles in this regard are settled and the judgments relied on by both the parties to the lis, are considered by this Court. Recording of those judgments repeatedly by this Court may not be required for the purpose of considering the facts and circumstances established in the present case on hand. The reasons furnished and disposal of reasons would play a pivotal role in arriving a decision. Considering the reasons furnished, the objections submitted by the petitioner and the disposal of the objections by the Competent Authority, this Court is of an opinion that the intricacies involved in the issues require an elaborate adjudication and admittedly, the petitioner is falling under the large tax payer unit and certain intricacies in deeper manner requires more adjudication with reference to the issues raised. Such an elaborate adjudication cannot be done with reference to the issues as the Assessee has to avail the opportunities to be provided, while proceeding with the reassessment proceedings and it is for the Assessee to participate in the reopening proceedings and avail the opportunities to be provided for the purpose of completion of reopening proceedings. This being the factum and the principles to the followed, this Court has no hesitation in arriving a conclusion that the Assessing Officer in the present case has established that he has reason to believe for reopening of assessment and there is no infirmity, as such, in reopening of the assessment u/s 147/148 - The petitioner has to cooperate for the early completion of the reopening proceedings. WP dismissed.

Summary

Issues Involved:
1. Legality of the notice issued under Section 148 of the Income Tax Act, 1961.
2. Validity of the reasons for reopening the assessment under Section 147.
3. Allegation of change of opinion.
4. Timeliness and adequacy of reasons provided for reopening.
5. Consideration of objections by the Assessing Authority.

Issue-wise Detailed Analysis:

1. Legality of the Notice Issued under Section 148:
The petitioner challenged the notice issued under Section 148 for the assessment year 2013-2014, arguing that it was based on a change of opinion and was issued without providing reasons within a reasonable time. The court noted that the petitioner had responded to the notice and requested reasons, which were subsequently provided. The petitioner then filed objections, which were disposed of by the Assessing Authority, leading to the current writ petition.

2. Validity of the Reasons for Reopening the Assessment under Section 147:
The court examined whether the reasons for reopening the assessment were valid. It was argued by the petitioner that the reasons amounted to a change of opinion. However, the respondents contended that the Assessing Officer had "reason to believe" that income chargeable to tax had escaped assessment, which is sufficient for reopening under Section 147. The court emphasized that the reasons must have a "live link" to the purpose of reopening and should not merely be a change of opinion.

3. Allegation of Change of Opinion:
The petitioner argued that the reopening was based on the same materials and issues already adjudicated during the original assessment, thus constituting a change of opinion. The court clarified that if new information or a different dimension of the same materials is discovered, it does not amount to a change of opinion. The court further noted that the Assessing Officer had identified new materials, such as the disallowance of provision for lease equalization charges under Section 115JB, which were not considered in the original assessment.

4. Timeliness and Adequacy of Reasons Provided for Reopening:
The petitioner contended that the reasons for reopening were not provided within a reasonable time. The court found that the reasons were indeed provided, and the petitioner had an opportunity to file objections, which were considered by the Assessing Authority. The court reiterated that the reasons must be sufficient to establish a "reason to believe" that income had escaped assessment, as per Section 147.

5. Consideration of Objections by the Assessing Authority:
The petitioner argued that the objections were not adequately considered by the Assessing Authority, who disposed of them in a mechanical manner. The court examined the disposal order and found that the objections were considered on an issue-by-issue basis. The court emphasized that the disposal of objections should be read in conjunction with the requirement under Section 147 that the Assessing Officer must have a "reason to believe" for reopening the assessment.

Conclusion:
The court concluded that the Assessing Officer had established a valid "reason to believe" for reopening the assessment and that there was no infirmity in the reopening process under Sections 147/148 of the Income Tax Act. The court dismissed the writ petition, stating that the petitioner must cooperate with the reopening proceedings for their early completion.