9911796707
|
Home
Issues:
Validity of reassessment under section 147(b) based on change of opinion. Analysis: The appeal before the Appellate Tribunal ITAT Allahabad involved the Department challenging the cancellation of reassessment by the AAC based on the jurisdiction assumed by the ITO under section 147(b). The case pertained to the assessment year 1975-76 of a registered firm engaged in the manufacture and sale of garments, including exports. The original assessment allowed a weighted deduction under section 35B, which was later considered excessive by the audit. Consequently, the ITO initiated reassessment under section 147(b) to rectify the excessive deduction. The assessee contended before the AAC that the reassessment was invalid as the conditions for jurisdiction under section 147(b) were not met, arguing that all material facts were disclosed during the original assessment. The AAC agreed with the assessee and canceled the reassessment, leading to the Department's appeal. Upon careful consideration, the Tribunal noted that for action under section 147(b) to be valid, the ITO must have received new information post the original assessment, leading to a belief of escaped income. Referring to the Supreme Court decision in India & Eastern Newspaper Society vs. CIT, it was established that a mere change of opinion by the ITO, without new information, does not warrant reassessment. The Tribunal found that the ITO's reassessment in this case was not based on valid grounds as the assessee had disclosed all relevant facts during the original assessment, and the audit's opinion did not constitute new information for reassessment purposes. Furthermore, a similar issue arose in another assessment year for the same assessee, where the Tribunal had previously canceled the reassessment. Citing this precedent, the Tribunal dismissed the Department's appeal, upholding the cancellation of reassessment by the AAC. Additionally, the assessee's cross objection, supporting the cancellation of reassessment, was deemed infructuous in light of the Tribunal's decision and was consequently dismissed. In conclusion, the Tribunal affirmed that the reassessment under section 147(b) was invalid due to the absence of new information warranting such action, emphasizing that a change of opinion without fresh facts does not empower the ITO to reassess income. The decision underscored the importance of adhering to legal requirements for initiating reassessment proceedings, ensuring fairness and transparency in tax assessments.
|
