2022 (10) TMI 415 - AT - Income Tax

Reopening of assessment u/s 147 - Whether proceedings initiated were merely on change of opinion? - HELD THAT - Reassessment is not a case where the assessee has not disclosed fully and truly all material facts but it is a case where the re-assessment proceedings were initiated only on a mere change of opinion by the A.O which is not permissible in law. We are of the considered view having perused the order of the ld. CIT(A) and examination of facts and circumstances in this case as well as aforestated judicial pronouncement of the Hon ble Bombay High Court 2022 (5) TMI 176 - BOMBAY HIGH COURT we find that here is the case where all the material facts were fully and truly disclosed by the assessee in the original scrutiny assessment proceedings. D.R also could not refute these facts on record. He could not demonstrate by placing any material to show that whether there was even a whisper of any new evidence enabling the A.O for resorting to re-assessment proceeding. It is also admitted by the parties that such re-assessment was undertaken by the department beyond the period of four years and when the assessee has disclosed fully and truly all material facts at the time of original assessment proceedings the proviso to section 147 does not warrant the A.O to further reopen such assessment when there is no new material or evidence in his possession to warrant such reopening of the proceedings. In view thereof, we have no reason to interfere with the findings of the ld. CIT(A) on facts as well as in law whereby the re-assessment proceedings has been held to be invalid and bad in law and we uphold the same. The appeal of the revenue is dismissed.

Summary

Issues Involved:
Validity of re-assessment proceedings initiated by the A.O beyond four years period under section 147 of the Income-tax Act, 1961.

Detailed Analysis:

Issue 1: Validity of Re-assessment Proceedings
The appeal raised concerns about the validity of the re-assessment proceedings initiated by the A.O. The ld. CIT(A) held that the reopening of the assessment u/s 147/148 was invalid and bad in law. The key contention was whether the A.O had proven that the assessee failed to disclose fully and truly all material relevant facts during the original assessment proceedings. The proviso to section 147 allows reopening beyond four years only under specific conditions.

Issue 2: Facts of the Case
The original assessment for the Assessment Year 2009-10 was completed under section 143(3) of the Act, accepting the returned income of the assessee. The case was reopened by the A.O, alleging that income chargeable to tax had escaped assessment. The A.O added an amount to the total income of the assessee under section 45 clause (1) of the Act related to the transfer of immovable properties.

Issue 3: CIT(A) Observations
The ld. CIT(A) examined the facts and submissions made by the assessee during the original assessment proceedings. The CIT(A) noted that the assessee had disclosed all material facts relevant for assessment, including details of the transfer of rights and receipt of payment. The A.O's reasons for reopening did not present any new evidence or facts not disclosed during the original assessment.

Issue 4: Judicial Pronouncements
The Tribunal referred to a judgment of the Hon'ble Bombay High Court, emphasizing that if all material facts were disclosed during the original assessment, reopening based on a mere change of opinion by the A.O is impermissible. The Tribunal found that in this case, the reassessment was initiated solely on a change of opinion, not on failure to disclose material facts.

Conclusion
After thorough examination of the case records, the Tribunal upheld the ld. CIT(A)'s decision that the re-assessment proceedings were invalid and bad in law. The Tribunal dismissed the revenue's appeal, concluding that the reassessment was not based on new evidence and that all material facts were disclosed during the original assessment. Consequently, the Cross Objection of the assessee was also dismissed as infructuous.

This detailed analysis highlights the key legal issues, factual background, observations made by the authorities, relevant judicial pronouncements, and the final conclusion reached by the Tribunal regarding the validity of the re-assessment proceedings.