2022 (9) TMI 52 - AT - Income Tax

Reopening of assessment u/s 147 - change of opinion - Non-deduction of TDS from transportation chargespaid by the assessee which were liable to be added back, purchase from undisclosed sources of income which is unexplained investment and was liable to be added to the income of the assessee and refund of VAT and TCS which were not reflected in the bank account of the assessee and thus recomputed the undisclosed income of the assessee which has escaped assessment and liable to be added - HELD THAT - We note that the assessment was framed in the case of assessee u/s 143(3) - We observe from the records and also rival arguments before us that the reasons recorded on the basis of audit report which was available before the AO at the time of original assessment proceedings which culminated in assessment order being framed u/s 143(3) - Thus, this apparent from the above that there was no new substantive material before the AO at the time of recording of reasons. In our opinion, the assessment was reopened on the basis of same material which was available before the AO in the original assessment proceedings. Therefore we do not find any infirmity in the order of Ld. CIT(A) which has been passed after following the decisions of Hon ble Apex Court in the case of CIT Vs Kelvinator of India Ltd 2010 (1) TMI 11 - SUPREME COURT and Hindustan Lever Ltd 2004 (2) TMI 42 - BOMBAY HIGH COURT Considering the facts and circumstances as discussed above we are inclined to uphold the order of ld CIT(A) on the issue of reopening. - Decided against revenue.

Summary

Issues:
1. Validity of notice u/s 148 of the Income Tax Act, 1961 for reassessment.

Analysis:

Issue 1: Validity of notice u/s 148 of the Income Tax Act, 1961 for reassessment

The case involved an appeal by the revenue against the order of the Ld. Commissioner of Income Tax (Appeals)-Ranchi regarding the assessment year 2010-11. The revenue challenged the quashing of the reassessment order by the Ld. CIT(A) on the grounds of an invalid notice u/s 148 of the Act. The reopening of the assessment was based on the escapement of income by the assessee, including non-deduction of TDS, undisclosed sources of income, and unreflected VAT and TCS amounts. The Ld. CIT(A) allowed the appeal of the assessee by questioning the reopening of assessment as bad in law, citing that all necessary information relied upon by the Assessing Officer was available on record during the original assessment proceedings, amounting to a 'change of opinion.' The Ld. CIT(A) referred to legal precedents to emphasize that the power to reassess cannot be based on a mere change of opinion and that the reasons for reopening an assessment must be tested based on the reasons recorded at the time of issuing the notice u/s 148. The tribunal upheld the order of the Ld. CIT(A), stating that the assessment was reopened on the basis of the same material available before the AO during the original assessment proceedings, and thus dismissed the appeal of the revenue.

In conclusion, the tribunal dismissed the appeal of the revenue, upholding the order of the Ld. CIT(A) regarding the validity of the notice u/s 148 of the Income Tax Act, 1961 for reassessment. The decision was based on the principle that the power to reassess cannot be exercised merely on the basis of a change of opinion, and the reasons for reopening an assessment must be examined based on the material available at the time of the original assessment proceedings.