1999 (5) TMI 61 - AT - Income Tax

Issues Involved:
1. Validity of reassessment proceedings initiated under Section 147(a) or 147(b) of the Income Tax Act.
2. Applicability of amended provisions of Section 147 effective from April 1, 1989.
3. Whether reassessment proceedings can be initiated based on reappraisal of the same material without fresh facts or material.
4. Whether the assessee disclosed full and true material facts necessary for the assessment.
5. Whether the reassessment proceedings were initiated merely on a change of opinion by the Assessing Officer (AO).

Detailed Analysis:

1. Validity of Reassessment Proceedings Initiated Under Section 147(a) or 147(b):
The assessee argued that the AO did not specify whether the reassessment proceedings were initiated under Section 147(a) or 147(b), despite requests for clarification. The CIT(A) quashed the reassessment proceedings, concluding that the AO did not have fresh facts or material but merely reappraised the same material to discover an error. The Tribunal upheld this view, emphasizing that the AO must clearly indicate the section under which proceedings are initiated to provide the assessee a reasonable opportunity to meet the charges.

2. Applicability of Amended Provisions of Section 147 Effective from April 1, 1989:
The Tribunal noted that the assessment years involved (1986-87 and 1988-89) were prior to the amendment effective from April 1, 1989. The CIT(A) decided the issue based on the unamended provisions of Section 147(a) and (b), and the Tribunal agreed that the amended provisions did not apply to these assessment years. The Tribunal dismissed the revised grounds of appeal filed by the Revenue, which sought to argue the applicability of the amended provisions, as they were not considered by the lower authorities.

3. Reassessment Based on Reappraisal of the Same Material Without Fresh Facts:
The CIT(A) found that the reassessment was initiated based on a reappraisal of the same material without any new facts or material. The Tribunal upheld this finding, noting that the AO cannot reopen a completed assessment merely on a change of opinion or reappraisal of the same material. The Tribunal cited several judicial precedents supporting this view, emphasizing that the AO must have fresh facts or material to justify reassessment.

4. Disclosure of Full and True Material Facts by the Assessee:
The assessee contended that it had disclosed all material facts necessary for the assessment, including detailed computations and revised claims for deduction under Section 80-I. The CIT(A) found that there was no omission or failure on the part of the assessee to disclose fully and truly all material particulars. The Tribunal agreed, noting that the assessee had provided detailed workings and explanations during the original assessment proceedings.

5. Reassessment Proceedings Initiated on Change of Opinion:
The Tribunal emphasized that reassessment proceedings cannot be initiated merely on a change of opinion by the AO. The Tribunal cited judicial precedents stating that an error discovered on reconsideration of the same material does not give the AO the power to reopen the assessment under Section 147(b). The Tribunal concluded that the AO's action was based on a change of opinion and not on any fresh facts or material, and therefore, the reassessment proceedings were not justified.

Conclusion:
The Tribunal dismissed the appeals filed by the Revenue, upholding the CIT(A)'s order quashing the reassessment proceedings for the assessment years 1986-87 and 1988-89. The Tribunal found that the reassessment was initiated without fresh facts or material, merely on a change of opinion, and that the assessee had disclosed all material facts necessary for the assessment.

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