2025 (2) TMI 573 - AT - Income Tax

Reopening of assessment u/s 147 - disallowance of the Bad-debts claimed - change of opinion - HELD THAT - From the perusal of the reasons recorded as well as perusal of the observation of the AO in disposing the objections raised by the assessee we find that there is no quarrel that assessee has not truly and fully disclosed all the material facts necessary for the purpose of assessment. In the original assessment proceedings the AO after considering all the material has framed an opinion that the income declared by the assessee is true and correct. There was nothing more to disclose and a person cannot be said to have omitted or failed to disclose something when of such thing he had no knowledge. Not only material facts were disclosed by the assessee but also they were fully scrutinized by the AO in the original assessment proceedings and figure of income as well as the deductions were worked out by the AO. The claim of bad debts is duly disclosed in the Profit Loss account which was available with the AO while framing the assessment. Now on the same material AO has tried to cover up the error and omission by way of reopening the assessment without any fresh material which is nothing but mere change of opinion. No new information and/ or tangible material was found and the formation of any opinion based on same facts which were then available with the AO at the time of original assessment is not permissible By respectfully following the judgement of Kelvinator of India Ltd. 2010 (1) TMI 11 - SUPREME COURT we are of the considered opinion that the reopening in the instant case is not based on fresh material and is in the nature of mere change of opinion. Accordingly the notice issued u/s 148 is hereby quashed. The ground of appeal No 1 of the assessee is allowed.

Summary

The appeal in this case was filed by the Assessee against the order of the Learned Commissioner of Income Tax (Appeals)-8, New Delhi, for the Assessment Year 2007-08. The Assessee raised several grounds of appeal, including challenging the reopening of the assessment under section 148 of the Income Tax Act, 1961, and contesting the addition of certain amounts written off by the Assessee in its books of accounts.The main issue before the Appellate Tribunal was whether the reopening of the assessment by the Assessing Officer was justified or amounted to a mere change of opinion. The Assessee argued that all material facts were available on record and had been duly considered during the original assessment under section 143(3) of the Act. The Assessee contended that the reassessment proceedings were solely based on audit objections and did not involve any fresh material. The Assessee relied on judicial pronouncements to support its argument that the reassessment was a mere change of opinion and should be quashed.On the other hand, the Senior Departmental Representative supported the lower authorities' decision and argued that the Assessee had not provided complete details of the bad debts claimed during the original assessment proceedings. The Senior Departmental Representative contended that the Assessing Officer had not formed an opinion on the claim of bad debts due to incomplete information provided by the Assessee. The Senior Departmental Representative cited relevant case law to support the position that the reopening of the assessment was justified.After hearing both parties and examining the facts and arguments presented, the Appellate Tribunal held that the reopening of the assessment was not based on fresh material but was a mere change of opinion. The Tribunal referred to the judgment of the Supreme Court in CIT Vs. Kelvinator of India Ltd., which emphasized that the Assessing Officer does not have the power to review but only to reassess based on certain pre-conditions. The Tribunal concluded that the reassessment in this case did not meet the criteria for valid reassessment and therefore quashed the notice issued under section 148. Consequently, the Assessee's appeal was allowed.In light of the Tribunal's decision to quash the reopening of the assessment, the other grounds of appeal related to the merits of the additions were deemed academic and not adjudicated upon. The Tribunal pronounced its order on 12.02.2025, in favor of the Assessee.