2022 (4) TMI 1232 - HC - Income Tax

Reopening of assessment u/s 147 - deduction claimed under section 80-IA - HELD THAT - It is evident from the affidavit-in-reply that the Assessing Officer had all material facts before him when he made the original assessment and issue of deduction under section 80IA of the Act was a subject of consideration during the assessment proceedings. In the present case, the petitioner had truly and fully disclosed all material facts necessary for the purpose of assessment. They were carefully scrutinized and figures of income as well as deduction were carefully reworked by the AO. In fact, in the reasons for reopening, there is not even a whisper as to what was not disclosed. In our view, this is not a case where the assessment is sought to be reopened on the reasonable belief that income had escaped assessment on account of failure of assessee to disclose truly and fully all material facts that were necessary for computation of income but this is a case wherein the assessment sought to be reopened on account of change of opinion of the Assessing Officer about the manner of computation and deduction under Section 80-IA of the Act. In our view, the same is not permissible. Petition allowed.

Issues:
1. Validity of notice under section 148 of the Income Tax Act, 1961 seeking to reopen assessment for A.Y. 2014-15.
2. Existence of new information or material for reopening assessment.
3. Compliance with proviso to section 147 of the Act regarding failure to disclose material facts.
4. Assessment reopening based on change of opinion or tangible material.

Issue 1: Validity of Notice under Section 148:
The petitioner challenged the notice dated 30.03.2021 issued by respondent No.2 under section 148 of the Income Tax Act, 1961, seeking to reopen the assessment for A.Y. 2014-15. The petitioner contended that all necessary material facts were disclosed during the original assessment proceedings, and there was no escapement of income chargeable to tax. The respondent provided the reasons for reopening, and the petitioner submitted objections to the proposed reassessment. However, the respondent rejected the objections, leading to the petitioner approaching the High Court.

Issue 2: Existence of New Information or Material:
The petitioner argued that the reasons for reopening assessment must be based on new information or material. It was contended that the Assessing Officer sought to reopen the proceedings based on the same material facts available during the original assessment. The petitioner emphasized that reassessment without additional information amounts to a change of opinion, which is impermissible under the law.

Issue 3: Compliance with Proviso to Section 147:
The proviso to section 147 of the Act states that reassessment proceedings cannot be initiated if there is no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. The petitioner asserted that their case fell within this proviso as all issues, including the deduction under section 80-IA of the Act, were duly scrutinized in the original assessment proceedings. The petitioner argued that there was no failure to disclose material facts as required by the proviso.

Issue 4: Assessment Reopening Based on Change of Opinion or Tangible Material:
The respondent contended that the reassessment was based on tangible material, specifically noting discrepancies in the financials of the petitioner for A.Y. 2014-15. The respondent argued that the reopening was not a mere change of opinion but was supported by tangible material justifying the reassessment. However, the High Court analyzed the reasons for reopening and concluded that there was no failure on the part of the petitioner to disclose material facts necessary for assessment. The Court held that the reassessment was sought due to a change of opinion by the Assessing Officer, which is impermissible under the law.

Judgment:
The High Court allowed the petition, quashing the notice dated 30.03.2021 seeking to reopen the assessment for A.Y. 2014-15 and the order dated 13.12.2021. The Court emphasized that the assessment could not be reopened based on a change of opinion and that all material facts were duly disclosed during the original assessment proceedings. The petition was disposed of with no order as to costs.

This detailed analysis covers the validity of the notice under section 148, the existence of new information for reassessment, compliance with the proviso to section 147, and whether the reassessment was based on a change of opinion or tangible material, providing a comprehensive overview of the judgment delivered by the High Court.

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