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2022 (4) TMI 624 - HC - Income TaxReopening of assessment u/s 147 - assessee has claimed deduction on account of notional foreign exchange loss - change of opinion - HELD THAT - As held by this Court time and again and particularly in Aroni Commercials Ltd. 2014 (2) TMI 659 - BOMBAY HIGH COURT that once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the Assessing Officer while completing the assessment. There can be no doubt in the present case that the very issue of foreign exchange loss was a subject matter of consideration of the Assessing Officer. It would therefore, follow that reopening of assessment by the impugned notice dated 31.03.2021 is merely on the basis of change of opinion of the Assessing Officer from that held earlier during the course of assessment proceedings. This change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment. - Decided in favour of assessee.
Issues:
Impugning notice under section 148 of the Income Tax Act, 1961 for A.Y. 2014-15 and rejection of objections to reopening. Analysis: 1. The petitioner challenged a notice dated 31.03.2021 issued under section 148 of the Income Tax Act, 1961, for A.Y. 2014-15, along with the order rejecting objections to reopening. The initial assessment under section 143(3) of the Act was completed on 28.12.2016, assessing total income as nil. 2. The notice dated 31.03.2021 alleged that the petitioner's income for A.Y. 2014-15 had escaped assessment. The petitioner requested the reasons for reopening, which were provided on 26.10.2021. The reasons pertained to the disallowance of deduction on account of notional foreign exchange loss claimed by the petitioner. 3. The petitioner argued that the reopening was based on a change of opinion, which is impermissible under the law. The proviso to section 147 of the Act bars reopening assessments after four years unless there is a failure to disclose material facts. The petitioner contended that there was no failure on their part to disclose material facts. 4. The respondent relied on a judgment to argue that failure to specifically state the failure to disclose all material facts in the reasons for reopening does not invalidate the jurisdiction under sections 147 and 148 of the Act. However, it was emphasized that there must be a clear indication in the reasons of such failure. 5. The court held that the reasons provided did not indicate any failure to disclose material facts by the petitioner. The court emphasized that failure to disclose could not be inferred from the reasons, rendering the reopening invalid. 6. It was noted that during the assessment proceedings, queries regarding the exchange loss were raised and duly responded to by the petitioner. The court cited precedents to establish that once queries are raised and answered during assessment, they are deemed to have been considered by the Assessing Officer. 7. The court concluded that the reopening of assessment was solely based on a change of opinion by the Assessing Officer, which is not a valid reason to believe that income has escaped assessment. The petition was allowed, quashing the notice seeking to reopen the assessment for A.Y. 2014-15 and the order rejecting objections. 8. The judgment underscores the importance of valid reasons for reopening assessments, emphasizing that mere change of opinion without new material does not warrant reopening. The court's decision reaffirms the principles governing the reopening of assessments under the Income Tax Act, ensuring the protection of taxpayer rights and procedural fairness.
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