2016 (5) TMI 1626 - HC - Income Tax

Reopening of assessment u/s 147 - provision for warranty made by the petitioner was not made on a scientific basis and reliance was placed upon the provisions made in the earlier assessment years - HELD THAT - The petitioner provided information to the respondents by their communication dated 21st January 2014. Some of the details sought for by the AO were not responded to by the assessee. Notwithstanding the above the AO on examination of the record appears to have been satisfied with the claim of provision for warranty made by the petitioner. This was for the reason that he did not reduce the provision made for warranty nor call upon the petitioner to submit other information which he had sought for and not provided by the petitioner. Therefore this would indicate that the Assessing Officer was satisfied with the information provided by the petitioner in its response to the communication dated 3rd December 2013. In the above view raising the same issue in support of the impugned notice prima facie appears to be a case of change of opinion. In the present case a query with regard to the very issue which the reasons recorded in support of the impugned notice advert to had been a subject of enquiry by the AO in regular assessment proceeding.

Summary

The Bombay High Court heard a petition challenging a notice seeking to reopen the assessment for the assessment year 2010-11 under Section 148 of the Act. The notice was based on the contention that the provision for warranty made by the petitioner was not done on a scientific basis and relied on provisions from earlier assessment years. The Assessing Officer had previously inquired about the warranty provision made by the petitioner, and despite some information not being provided by the petitioner, the Assessing Officer appeared satisfied with the claim. The court noted that raising the same issue in support of the notice seemed to be a change of opinion. The court distinguished a previous case cited by the Revenue's counsel, stating that in this case, the issue had been addressed during the regular assessment proceedings. As a result, the court granted interim relief as per the prayer clause (D).