2023 (5) TMI 279 - HC - Income Tax

Reopening of assessment u/s 147 - Reason to believe - change of opinion - reopenig beyong period of four years - HELD THAT - The criteria for reopening of assessment after a period of four years are no longer res integra in view of the judgement of this Court in the case of Ananta Landmark P. Ltd v Dy. CIT 2021 (10) TMI 71 - BOMBAY HIGH COURT wherein this Court held that where assessment was not 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 was a case wherein assessment was sought to be reopened on account of change of opinion of AO the reopening was not justified. In the present case, the Respondent No. 1 has relied upon the same information available from the assessment records there was no new tangible material available on record to conclude that income had escaped assessment. In our view it is clearly a change of opinion . Besides a perusal of the ITAT order dated 11th January 2022 evinces that the same contentions are rejected by the ITAT and have attained finality in favour of the Petitioner. AO ought to have considered the order passed by the ITAT and could not feign ignorance as late as on 16th March 2022 especially when the revenue (respondent/s) was a party to the proceeding. Even the reply filed on 13th June 2022 is silent on the effect of the ITAT order. It essentially states that the Petitioner has failed to disclose material facts fully and truly in the original assessment. Decided in favour of assessee.

Summary

Issues involved:
The judgment challenges a notice under section 148 of the Income-tax Act, 1961 for reassessment of income for the assessment year 2015-16 and the rejection of objections raised by the Petitioner to the proposed reopening.

Reopening of Assessment:
The notice for reopening was based on the contention that the assessee sold office premises and purchased commercial property, but the transaction was not completed by the end of the assessment year. The AO believed that income had escaped assessment, leading to the reopening of assessment proceedings under section 147 of the Income-tax Act, 1961. However, the ITAT set aside the assessment order citing issues related to the purchase of commercial property, income received without TDS deduction, and genuineness of business promotion expenses.

Change of Opinion and Finality of ITAT Order:
The Court held that the reopening of assessment was a "change of opinion" as there was no new material to suggest income escapement. The ITAT order rejecting the contentions against the Petitioner had attained finality, and the AO should have considered it before rejecting the objections. The Respondents failed to acknowledge the ITAT order, and the Court ruled in favor of the Petitioner, quashing the notice and order issued by Respondent No.1 for AY 2015-16.

Conclusion:
The judgment emphasized the importance of considering final decisions by appellate authorities and criticized the Respondents for not withdrawing the notice despite the ITAT's ruling. The Court highlighted the need for transparency and honesty from all parties involved in legal proceedings. Ultimately, the Petitioner succeeded in the case, leading to the quashing of the notice and order issued for the assessment year in question.