2021 (12) TMI 517 - HC - Income Tax

Reopening of assessment u/s 147 - Notice issued after four years - eligibility of reasons to believe - HELD THAT - As stated in the reasons that giving amount received towards corpus fund has to be treated as income of the current year and brought to tax but it remained to be added to the income. It then says after perusal of the case reference revealed that the assessee is having income from holding of exhibition and other related activity from members and non-members; the assessee has received ₹ 3,50,00,000/- on account of education fund, Trade Industry Development Fund, Research Fund, RSDC Skill Development Fund; these funds were not routed through Income and Expenditure Account and directly credited to corpus fund. As per the details available on record, the assessee has been denied the benefits of trust etc. Therefore, there is nothing in the reasons recorded to show that petitioner had failed to disclose all material facts. Moreover, petitioner has annexed to the petition a copy of the audit query or revenue audit, DCIT (Exemption) which indicates that decision to re-open the assessment is purely based on this audit query. Income Tax Officer must determine for himself what is the effect and consequence of the law mentioned in the audit note and whether in consequence of the law which has come to his notice he can reasonably believe that income had escaped assessment. The basis of his belief must be the law of which he has now become aware. The opinion rendered by the audit party in regard to the law cannot, for the purpose of such belief, add to or colour the significance of such law. The true evaluation of the law in its bearing on the assessment must be made directly and solely by the Income Tax Officer. This is not the case with the matter at hand. We found support for this view in Ananta Landmark (P) Ltd. vs. Deputy Commissioner of Income-tax, Central Circle 5 (3), Mumbai 2021 (10) TMI 71 - BOMBAY HIGH COURT When the primary facts necessary for assessment are fully and truly disclosed, the Assessing Officer is not entitled on change of opinion to commence proceedings for reassessment. Where on consideration of material on record, one view is conclusively taken by the Assessing Officer, it would not be open to re-open the assessment based on the very same material with a view to take another view.

Summary

Issues: Impugning notice under Section 148 of the Income Tax Act for A.Y. 2013-14.

The judgment by the Bombay High Court dealt with the challenge to a notice issued under Section 148 of the Income Tax Act for the assessment year 2013-14. The petitioner contested the notice, claiming that there was no failure to disclose material facts. The court examined the reasons for re-opening the assessment and concluded that it amounted to a change of opinion, which is impermissible in law. It was established that the petitioner had fully and truly disclosed all material facts, and the basis for re-opening the assessment was solely accounts or returns filed by the petitioner. The court emphasized that when primary facts necessary for assessment are fully disclosed, the Assessing Officer cannot initiate reassessment based on a change of opinion. The judgment referenced the case of Ananta Landmark (P) Ltd. vs. Deputy Commissioner of Income-tax, highlighting the importance of the Income Tax Officer independently evaluating the law in relation to the assessment. Ultimately, the court allowed the petition, quashing the notice and order issued by the respondent for the relevant assessment year 2013-14.