2021 (8) TMI 780 - HC - Income Tax

Reopening of assessment u/s 147 - survey u/s 133A was conducted in the business premises of the petitioner - HELD THAT - Reasons for reopening would reveal that a survey u/s 133A was conducted in the business premises of the petitioner on 31.07.2009 and they found that huge cash payments were made and these cash payments were not taken into consideration at the time of scrutiny assessment and passing assessment order on 02.12.2010. AO has reasons to believe that such payments which were not considered during the original assessment escaped assessment and therefore, notice u/s 148 was issued. Once a tangible new material is identified and such materials were not considered by the assessment officer while at the time of passing original assessment order, it is sufficient to reopen the assessment and it is for the petitioner to defend his case by availing the opportunities to be provided during the course of the reopening proceedings. The petitioner has not made out any acceptable ground for the purpose of setting aside the impugned orders. Contrarily, the revenue could able to establish that the assessing officer has reasons to believe for reopening of assessment as the survey report under Section 133A was not considered at the time of passing of the original assessment order and further, huge cash transactions were identified during the survey. Thus, the petitioner is bound to cooperate for the completion of reopening proceedings, which is to be expedited. Accordingly, the writ petition is dismissed.

Summary

Issues:
1. Challenge to notice issued under Section 148 of the Income Tax Act and order disposing objections.
2. Contention of 'change of opinion' regarding reopening of assessment.
3. Application of judgment by respondent in disposing of objections.
4. Consideration of survey report in original assessment.
5. Relevance of new material from survey report for reopening assessment.
6. Sufficiency of reasons for reopening assessment.
7. Defending case during reopening proceedings.

Analysis:

1. The petitioner challenged the notice under Section 148 of the Income Tax Act and the order disposing of objections. The petitioner, a private limited company, filed its return for the assessment year 2008-09, which was processed under Section 143(1). Subsequently, a survey under Section 133A was conducted, and the assessment order was passed on 02.12.2010. The notice for reopening was issued in 2012, leading to objections from the petitioner.

2. The petitioner argued that the reopening of assessment was a 'change of opinion' as the assessing officer had considered the survey report before passing the original assessment order. The petitioner contended that all relevant materials were available during the original assessment, and there was no tangible reason for reopening the assessment under Section 147 of the Act.

3. The respondent cited a judgment in the order disposing of objections, which the petitioner claimed was not applicable to their case. The respondent maintained that the reassessment was based on tangible material, specifically highlighting cash payments not accounted for by the assessee. The respondent emphasized the relevance of new information from the survey report for reopening the assessment.

4. The assessing officer did not reference the survey report in the original assessment order, leading to the initiation of reopening proceedings under Section 147 of the Act. The reasons furnished indicated significant cash payments not reflected in the company's records, prompting the need for reassessment.

5. The court held that the assessing officer had valid reasons to believe that income chargeable to tax had escaped assessment, justifying the reopening under Section 147. The presence of new material, such as unaccounted cash payments from the survey report, supported the reopening of assessment proceedings.

6. The petitioner's defense based on the presumption that the assessing officer had considered the survey report during the original assessment was deemed insufficient without any reference or findings in the assessment order. The court emphasized the need for tangible new material to justify reopening assessments.

7. Ultimately, the court dismissed the writ petition, stating that the petitioner failed to provide acceptable grounds to set aside the impugned orders. The revenue successfully demonstrated the assessing officer's valid reasons for reopening the assessment, necessitating the petitioner's cooperation in the expedited completion of the reassessment proceedings.