2021 (9) TMI 667 - HC - Income Tax

Reopening of assessment u/s 147 - rejecting the objection of the petitioner against the recorded reason for reopening of assessment - HELD THAT - Revenue could not satisfy this Court about what new material of documents came into the possession of the Assessing Officer after the order of assessment under Section 143(3) of the Act, which were not produced by the assessee before the Assessing Officer in course of regular assessment. We are inclined to set aside the impugned order dated July 30, 2021 of rejecting the objection of the petitioner to the recorded reason and subsequent notice under Section 142(1) of the Act and remand the case to the AO for a limited purpose and only to the extent to reconsider the aforesaid judgment of the Tribunal on the issue in question in the case of Deputy Commissioner of Income-tax, Circle-6, Kolkata Vs. National Insurance Co. Ltd. 2016 (8) TMI 326 - ITAT KOLKATA and also the contention of the petitioner about the change of opinion and pass a fresh speaking order after giving opportunity of hearing to the petitioner or his authorised representative within four weeks from the date of communication of this order. The subsequent proceeding under Section 147 of the Act will depend upon the fresh order to be passed by the respondent-Assessing Officer concerned

Summary

Issues:
Challenge to impugned notice under Section 148 of the Income Tax Act, 1961 for assessment year 2013-14, rejection of objection against reopening of assessment under Section 147, validity of Assessing Officer's reasons for reopening, applicability of change of opinion doctrine, relevance of minimum alternate tax (MAT) issue, consideration of previous tribunal judgment, binding nature of CIT Appeal and Tribunal orders on Assessing Officer.

Analysis:
The petitioner contested the impugned notice dated March 17, 2020 under Section 148 of the Income Tax Act, 1961 for the assessment year 2013-14, along with the order dated July 30, 2021 rejecting objections against the reopening of assessment under Section 147. The petitioner argued that the criteria for reopening under Section 147 were not met, as there was no failure to disclose income fully and truly during the original assessment. Additionally, the petitioner claimed that the Assessing Officer's reasons for reopening were based on a mere change of opinion, as the same information had been considered in the original assessment under Section 143(3) without issue. The petitioner also contended that the MAT issue, which was the subject of the reopening, had already been decided in favor of the assessee in a previous tribunal judgment, making the reopening unnecessary and unjustified. The Assessing Officer failed to provide any new material or documents post the original assessment to warrant the reopening, as highlighted in the recorded reasons.

The respondent, represented by Mr. Dutta, could not establish the presence of new material or documents justifying the reopening after the original assessment under Section 143(3). Mr. Dutta relied on Explanations (I) and (III) under Section 147, but the court found his arguments unconvincing and unacceptable. The court noted that the Assessing Officer had not addressed the petitioner's reliance on the previous tribunal judgment, which should have been binding as per Section 119 of the Income Tax Act, 1961.

In light of the submissions from both parties, the court decided to set aside the order rejecting the petitioner's objection and remand the case to the Assessing Officer. The Assessing Officer was directed to reconsider the relevant tribunal judgment on the MAT issue and the petitioner's claim of change of opinion. A fresh order was to be passed after providing the petitioner an opportunity to be heard within four weeks. The subsequent proceedings under Section 147 would depend on the fresh order by the Assessing Officer. The court disposed of the writ petition without calling for an affidavit, deeming the allegations contained therein to be denied by the respondents.