2023 (6) TMI 1038 - HC - Income Tax

Reopening of assessment u/s 147 - deduction u/s 80-O claimed - change of opinion - claim of deduction u/s 80-O consequent to the amendment w.e.f. A. Y. 1998-99 but copies of the bills were not produced - HELD THAT - As perused the Assessment Order in which the only issue which has been discussed is the deduction claimed under Section 80-O. AO has extensively dealt with the submission of bills during the assessment proceedings - AO has also recorded that the assessee even submitted relevant supporting vouchers and bills which have been verified on the test case basis with the detailed statement filed by the assessee. This indicates that what is recorded in the reasons to believe that assessee did not produce bills is incorrect. As held by this Court in Aroni Chemicals Limited 2014 (2) TMI 659 - BOMBAY HIGH COURT once a query is raised during assessment proceeding and the assessee has replied to it it follows that the query raised was a subject of consideration of the A. O. while completing the assessment. In the case at hand from the Assessment Order it is quiet clear that the A. O. has not only considered but also extensively dealt with in the Assessment Order the deduction claimed under Section 80-O - Therefore there can be no doubt in the present facts that the re-opening of the assessment is merely on the basis of change of mind of the A.O. from that held earlier during course of assessment proceedings leading to the Assessment Order. 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.

Summary

Issues involved: Impugning a notice for escaped income assessment under Section 147 of the Income Tax Act, 1961 for Assessment Year 1998-99.

Summary:
The petitioner challenged a notice issued by Respondent No. 1 regarding escaped income assessment for the Assessment Year 1998-99. The notice was issued after the four-year limitation period, triggering the proviso to Section 147 of the Act, requiring income to have escaped assessment due to the assessee's failure to disclose material facts. The reasons to believe for reopening the assessment indicated a change of opinion by the Assessing Officer (A.O.), as the issue had been disclosed and explained during the assessment proceedings. The A.O. had reduced the deduction under Section 80-O based on expenditure incurred in India, similar to previous years' actions. The A.O. had considered the submissions and bills provided by the assessee during the assessment proceedings, contradicting the reasons to believe that bills were not produced. A further objection raised by Respondent No. 1 regarding an amendment to the law during the assessment year was countered by evidence of the assessee's compliance with the amendment. The Court held that the re-opening of the assessment was unjustified, as it was based on a change of opinion rather than any new evidence of escaped income. The Court granted the writ of Certiorari, quashing the impugned notice and reassessment proceedings for the Assessment Year 1998-99.

The judgment highlights the importance of disclosing all material facts during assessment proceedings to avoid challenges based on a change of opinion by the Assessing Officer.