2021 (8) TMI 675 - HC - Income Tax

Reopening of assessment u/s 147 - whether the reasons assigned by the Assessing Officer in his communication for reopening the assessment, can be taken to be valid? - HELD THAT - On a plain reading of the reasons as communicated in the letter, dated 26.09.2017, it is evidently clear that the AO did not have any new tangible material for reopening the proceedings, as the reason is prefaced by the sentence In the return of income filed for the A.Y.2011-12, the assessee has debited a certain amount . Courts have always held that the Assessing Officer is always an independent authority who has to exercise his powers within the four corners of law and it is not for the higher authorities or for the assessee to tell as to in what manner the assessment has to be completed. The duty of the assessee is to fully and truly disclose all the material particulars. There is no allegation made by the AO that the assessee had failed to fully and truly disclose all relevant materials for completing the assessment. Therefore, we are of the view that the reopening was a clear case of change of opinion. We find from the reasons dated 26.09.2017 that there is no whisper of any tangible material, and all information has been culled out from the returns filed by the assessee and the agreement, dated 30.06.2010, which was very much available when the original assessment was completed vide order dated 31.03.2014. Revenue had filed a Miscellaneous Petition in which 2017 (2) TMI 546 - ITAT CHENNAI they had stated that the assessee had produced new material by way of producing the agreement dated 30.06.2010, which was not available when the assessment was completed on 31.03.2014. This appears to be factually incorrect, as the Assessing Officer, while completing the assessment, has specifically noted the agreement which was produced and placed before the Assessing Officer. Be that as it may, the said Miscellaneous Petition has been dismissed by the Tribunal. As has always been observed, notice under Section 147 is not to be casually invoked to suit the convenience of the Department or to correct any alleged errors which would have been committed by the Assessing Officer. In the instant case, we find that, not only the ingredients required to be fulfilled in the first proviso to Section 147 have not been fulfilled, there is no allegation made against the assessee for not having made full or true disclosure of all material particulars and the reopening of the assessment would also be barred in terms of the third proviso to Section 147. As observed earlier, it is a clear case of change of opinion, and that apart, the Assessing Officer has not brought on record any new tangible material to reopen the assessment, which has been done beyond the period of four years. We hold that the reopening proceedings is without jurisdiction and bad in law.

Summary

Issues:
Challenge to correctness of order under Section 148 of the Income Tax Act, 1961.

Analysis:
The writ petitioner contested the notice issued by the Revenue under Section 148 of the Income Tax Act, 1961, and the subsequent order disposing of objections. The High Court entertained the writ petition despite jurisdictional issues raised, as no alternative remedy was available under the Act. The appellant raised contentions regarding fulfillment of conditions under Section 147, lack of full disclosure, and the issue of change of opinion. The Revenue justified the reopening based on new information regarding administrative expenses. The Court analyzed Section 147 and emphasized the need for valid reasons to believe income escaped assessment.

The Court reviewed the history of the case, highlighting the agreement between the assessee and another party, subject to approval from a third party. Previous assessments and appeals had concluded on the matter. The Court found the reopening lacked new tangible material, constituting a clear case of change of opinion. The reassessment was deemed without jurisdiction and bad in law. The Court set aside the Assessment Order if passed, based on the interim order of status quo.

In conclusion, the Writ Appeal was allowed, setting aside the order in the Writ Petition and quashing the reopening proceedings. Any Assessment Order passed was also quashed. No costs were awarded, and the connected miscellaneous petition was closed.