2021 (12) TMI 880 - HC - Income Tax

Reopening of assessment u/s 147 - Eligibility of reasons to believe - claim of unabsorbed depreciation and business loss - HELD THAT - Perusal of the reasons record by respondent No.1 indicates that the notice of reassessment proceeds on the basis of material which was available during original assessment and is not based on fresh tangible material received. The record indicates that a specific query was raised during original assessment and Petitioner had submitted details of unabsorbed depreciation and business loss. Petitioner had disclosed the figures of unabsorbed business loss and unabsorbed depreciation in ITR Form-6. Petitioner had also filed computation of income under provisions of the said Act. Petitioner had also disclosed in Schedule relating to MAT in the said Form giving details of working of book profit including specific disclosures under the head Loss brought forward or unabsorbed depreciation, whichever is less . From the reasons recorded by Respondent No.1, it appears that there was no tangible material for Respondent No.1 to conclude that income had escaped assessment. For the aforesaid reasons the Assessing Officer has acted in excess of the limit of his jurisdiction to reopen the assessment in the exercise of powers under Section 147 read with Section 148 of the said Act. Accordingly, Petitioner would be entitled to succeed in this proceeding. - Decided in favour of assessee.

Summary

Issues:
Challenging notice under section 148 of Income Tax Act for reopening assessment for Assessment Year 2012-13 and rejection of objections.

Analysis:

1. Reopening of Assessment: The petitioner challenged the notice dated 27th March 2019 under section 148 of the Income Tax Act for reopening the concluded regular assessment for Assessment Year 2012-13. The petitioner argued that the notice was issued after four years from the end of the relevant Assessment Year, and the Assessing Officer must have reasons to believe that income has escaped assessment. The court examined the reasons recorded for reopening and found that they were not based on fresh tangible material but on the material available during the original assessment. The court held that there was no tangible material for the Assessing Officer to conclude that income had escaped assessment, thereby ruling in favor of the petitioner.

2. Disclosure of Material Facts: The court emphasized that the Assessing Officer's jurisdiction to reopen an assessment is limited to cases where there is a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. It was noted that the petitioner had disclosed the figures of unabsorbed business loss and unabsorbed depreciation in the prescribed form ITR-6 during the original assessment. The court found that the petitioner had fully and truly disclosed the primary facts necessary for assessment, and hence, the Assessing Officer was not entitled to reopen the assessment on a change of opinion.

3. Legal Precedent: The court referred to the judgment in the case of Ananta Landmark (P) Ltd. v/s. Dy. Commissioner of Income Tax, where it was held that reopening an assessment based on a change of opinion of the Assessing Officer is not justified if the primary facts necessary for assessment are fully and truly disclosed. The court reiterated that if one view is conclusively taken by the Assessing Officer based on the material on record, it is not permissible for the officer to reopen the assessment and take another view. This legal precedent played a crucial role in the court's decision to quash the impugned notice and rejection of objections.

4. Conclusion: Considering the lack of fresh tangible material and the full disclosure of primary facts by the petitioner during the original assessment, the court concluded that the Assessing Officer exceeded the limit of jurisdiction in reopening the assessment. Consequently, the court quashed and set aside the notice dated 27th March 2019 and the order dated 18th September 2019 rejecting objections, thereby ruling in favor of the petitioner.