2023 (8) TMI 1085 - HC - Income Tax

Reopening of assessment u/s 147 - Validity of notice u/s 148 - as argued notice was based only on change of opinion and there was no escapement of income - Assessment of trust - assessee had earmarked funds under the head Fund Pending Utilization and had not included in receipts - HELD THAT - In Kelivinator of India Limited 2010 (1) TMI 11 - SUPREME COURT it was held that there can be re-opening of assessment under Section 148 of the Act only if the Assessing Officer has reason to believe that any income chargeable to tax had escaped assessment for any assessment year - Thus on account of a mere change of opinion, re-assessment proceedings cannot be initiated by assessing office. This has been reiterated in ICICI Securities Primary Dealership Limited 2012 (8) TMI 754 - SC ORDER and Techspan India Private Limited - 2018 (4) TMI 1376 - SUPREME COURT So we do not find any merit of ground for the assessment years 2004-05 and 2005-06. Revision u/s 263 - as per CIT AO had fail to apply the correct provisions of Section 12(1) - HELD THAT - The findings of fact recorded by the CIT(Appeals) had been confirmed by the Tribunal in all these appeals holding that these findings had not been assailed by the Revenue through any evidence or material on record; and therefore it is established that the assessee utilized the fund for the purpose of achieving its objective, and that the utilization was more than the prescribed limit, consequent upon which there was no reason to make additions against the assessee. After considering the facts and circumstances and the contentions of the Revenue, we are satisfied that no question of law much less substantial question of law arises for consideration in these appeals and we hold that the findings recorded by the Tribunal cannot, in the facts and circumstances, be said to be perverse.

Summary

Issues involved:
The judgment involves appeals under Section 260A of the Income Tax Act,1961 for multiple assessment years, challenging orders passed by the Income Tax Appellate Tribunal. The key issues include the validity of the notice under Section 148, treatment of specific purpose donations, recognition of "Fund Pending Utilization," and the application of funds for charitable purposes.

Assessment year 2004-05:
The substantial questions of law for this assessment year revolve around the validity of the notice under Section 148 and the treatment of earmarked funds as income. The Tribunal held that re-opening the case based on the same issue amounts to a change of opinion, which is impermissible in reassessment proceedings. It emphasized that reassessment cannot be initiated solely on the basis of a change of opinion, citing relevant case law.

Assessment years 2005-06, 2006-07, 2007-08, 2008-09, 2009-10:
For these assessment years, the issues were similar, focusing on the treatment of funds pending utilization and the application of funds for charitable purposes. The CIT (Appeals) and the Income Tax Appellate Tribunal ruled in favor of the assessee, emphasizing that the funds were utilized for charitable purposes and met the statutory requirements. The Tribunal confirmed that the assessee had spent more than 85% of its receipts for charitable objectives, leading to the deletion of additions made by the Assessing Officer.

Assessment year 2006-07 to 2009-10:
In these assessment years, the Commissioner of Income Tax revised the assessment orders under Section 263, directing fresh assessment orders due to alleged incorrect application of provisions. However, the CIT (Appeals) and the Tribunal upheld the assessee's position, stating that the funds were utilized appropriately for charitable purposes, exceeding the prescribed limit. The Tribunal found no merit in the appeals, as the findings were not challenged with evidence, confirming the utilization of funds for the intended objectives.

Consideration by the Court:
The Court reiterated that reassessment cannot be initiated based on a mere change of opinion, emphasizing the need for income to have genuinely escaped assessment for re-opening under Section 148. It highlighted that the Assessing Officer cannot resort to reassessment solely due to a change of opinion on previously considered facts. The Court dismissed the appeals for the assessment years 2004-05 and 2005-06, as well as for the subsequent assessment years, finding no substantial questions of law and upholding the Tribunal's findings.