2023 (10) TMI 137 - HC - Income Tax

Reopening of assessment u/s 147 - Reason to believe - change of opinion - HELD THAT - The law as held in Siemens Financial Services 2023 (9) TMI 552 - BOMBAY HIGH COURT is clear that reopening of assessment is not permissible based on change of opinions as the AO does not have any power to review his own assessment when during the original assessment Petitioner has provided all the relevant information which was considered by the AO before passing the assessment order u/s 143(3. The reason we say that there is a change of opinion is because once a query has been raised during the assessment and query has been answered and accepted by the AO while passing the assessment order, it follows that the query raised was a subject of consideration of the AO while completing the assessment. This would apply even if the assessment order has not specifically dealt with that issue. It is not necessary that an assessment order should contain reference and/or discussion to disclose his satisfaction in respect of the query raised. As held in Aroni Commercials Ltd 2014 (2) TMI 659 - BOMBAY HIGH COURT if an AO has to record the consideration bestowed by him on all issues raised by him during the assessment proceedings even where he is satisfied, then it would be impossible for the AO to complete all the assessment which are required to be scrutinized by him under Section 143(3) of the Act. Therefore, it would follow that the reopening of the assessment by the impugned notice is merely on the basis of change of opinion from that held earlier during the course of assessment proceedings that led to the passing of the assessment order - In our view, this change of opinion does not constitute justification to believe that income chargeable to tax has escaped assessment.

Summary

Issues Involved:
1. Validity of reopening of assessment under Section 148 of the Income Tax Act, 1961.
2. Whether the reassessment was based on a change of opinion.

Summary:

1. Validity of Reopening of Assessment:
The petitioner challenged a notice dated 17th March 2023 under Section 148A(b), an order dated 30th March 2023 under Section 148A(d), and a reassessment notice dated 30th March 2023 under Section 148 of the Income Tax Act, 1961. The petitioner argued that the reassessment was based on a change of opinion, which is not permissible. The petitioner had filed a return for A.Y. 2016-2017, declaring an income of Rs. 11,17,62,590/-, and had paid Rs. 3,04,85,970/- as management fees, including Rs. 1.90 crores to Insignia Sports International Ltd. During the original assessment, the petitioner had responded to various notices under Section 142(1) and provided detailed information, including the non-deduction of TDS on payments to Insignia.

2. Change of Opinion:
The court noted that the issue of non-deduction of TDS on payments to Insignia was raised during the original assessment proceedings, and the petitioner had provided explanations which were accepted by the Assessing Officer (AO). The court emphasized that reopening an assessment based on a change of opinion is not permissible, citing the judgment in Aroni Commercials Ltd vs. Assistant Commissioner of Income-tax, where it was held that change of opinion does not constitute justification to believe that income has escaped assessment. The court also referred to Siemens Financial Services Pvt Ltd. vs. Deputy Commissioner of Income Tax, which reiterated that the AO does not have the power to review his own assessment.

Conclusion:
The court concluded that the reopening of the assessment was merely based on a change of opinion from that held earlier during the original assessment proceedings. This change of opinion does not justify the belief that income chargeable to tax has escaped assessment. Consequently, the court allowed the petition, quashing and setting aside the impugned notices and orders dated 17th March 2023 and 30th March 2023. The petition was disposed of accordingly.