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2021 (10) TMI 518 - HC - Income TaxValidity of Reopening of assessment u/s 147 - eligible reason to believe - change of opinion - Non furnishing of reasons within reasonable time - whether new facts coming to the knowledge of the Assessing Officer subsequent to the original assessment proceedings? - HELD THAT - AO while disposing of the objections by order dated 16.10.2018, has accepted the fact that the grounds on which the assessment was reopened were verified by his predecessor, while completing the assessment u/s 143(3) of the Act. If such is the understanding of the Assessing Officer, then we have no hesitation to hold that the reopening is a clear case of change of opinion. Assessee, in their objections, had also referred to the Circular issued by the Central Board of Direct Taxes, vide Circular No.549 dated 31.10.1989, wherein, it was clarified that a mere change of opinion cannot constitute a reason to believe under Section 147 of the Act so as to justify the reopening of assessment. Thus, in the absence of new facts coming to the knowledge of the AO subsequent to the original assessment proceedings, the reopening could not have been done on the same materials - from reasons for reopening, it is evidently clear that all the materials have been culled out from the return of income filed by the assessee and the Annexure thereto. Thus, the impugned reassessment proceedings, having been done with the same set of facts which were available during the regular assessment, is to be held to be a clear case of change of opinion. Delay in furnishing the reasons - Notice u/s 148 was issued on 29.03.2018. The assessee within 30 days by their letter dated 27.04.2018 had sought for reasons for initiating the reopening proceedings. AO did not furnish the reasons nor responded to the said letter, but proceeded to issue the notice under Section 143(2) dated 21.08.2018 - assessee submitted another letter dated 27.08.2018, requesting for furnishing the reasons for reopening. It is only thereafter, the reasons for reopening were furnished vide letter dated 30.08.2018. It is not clear as to why there was such a delay in furnishing the reasons. As in the case of GKN Driveshafts (India) Limited 2002 (11) TMI 7 - SUPREME COURT has held that the reasons shall be furnished within a reasonable time by the Assessing Officer, upon receiving the request for the same from the assessee. There is an enormous delay in furnishing the reasons for reopening and we are of the opinion that the reasons were not furnished to the assessee within a reasonable time. - Decided in favour of assessee.
Issues:
Challenge to order under Section 148 of the Income Tax Act, 1961 for Assessment Year 2013-2014. Analysis: 1. The Writ Appeal challenged the order passed under Section 148 of the Income Tax Act, 1961 for the Assessment Year 2013-2014. 2. The assessment was completed earlier, but a notice under Section 148 was issued in 2018 to reopen the assessment, leading to objections by the assessee. 3. The Single Bench initially dismissed the writ petition, emphasizing the need for new information or material to justify reopening. 4. The High Court referred to the Supreme Court's decision in Commissioner of Income Tax v. Kelvinator India Limited, highlighting the importance of a valid "reason to believe" for reopening assessments. 5. The legal principle established requires new material facts to support a "reason to believe" and not a reevaluation of existing facts. 6. The assessment was reopened on five grounds, with the assessee challenging each issue based on information already provided during the original assessment. 7. The High Court found that the reopening was a clear case of change of opinion as the same set of facts from the original assessment was used. 8. The delay in furnishing reasons for reopening was noted, but the High Court focused on the substantive issue of change of opinion rather than the procedural delay. 9. Ultimately, the Writ Appeal was allowed, setting aside the order and quashing the reopening proceedings based on the finding of change of opinion.
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