2014 (9) TMI 785 - HC - Income Tax

Reopening of assessment u/s 148 Gifts received from siblings Change of opinion - Held that - The AO asked for various details in respect of the gift of ₹ 12.80 lakhs received from Mr. Arun Mehra - the AO had formed an opinion that the gift received by the Petitioner from Mr. Arun Mehra was genuine during the assessment proceeding leading to order dated 31st March, 2006 - the notice seeking to reopen the assessment for the AY 2001-02 is clearly without jurisdiction as it is based on a mere change of opinion - The formation of the opinion is to be of an AO who passes the Assessment Order - At the time of reopening of assessment what has to be examined before issuing the notice u/s 148 of the Act, is whether the AO had formed an opinion - If yes, then the assessment is not amenable to jurisdiction u/s 148 of the Act - The enquiry for the purposes of forming of an opinion will different from person to person and in any case the depth of enquiry is not the test to determine the issue of formation of opinion - Where there is even a modicum of enquiry on an issue arising during assessment proceeding under Section 143(3) of the Act, it shall follow that there has been formation of opinion Decided in favour of assessee.

Summary

Issues:
Challenge to notices issued under Section 148 of the Income Tax Act, 1961 for reopening assessment for the Assessment Year 2001-02 based on alleged income escaping assessment due to gifts received.

Analysis:
1. Background: Two petitions challenge separate notices dated 31st March, 2006, under Section 148 of the Income Tax Act, 1961, seeking to reopen the assessment for the Assessment Year 2001-02 for siblings who individually received gifts during the year. The petitions and challenges are identical, differing only in the gift amounts received.

2. Initial Assessment: The petitioner filed a return of income for Assessment Year 2001-02, declaring total income of Rs. 3.16 lakhs. The assessment was completed on 11th November, 2003, accepting the declared income but not mentioning the gift received. Subsequently, notices were issued to reopen the assessment based on alleged income escaping assessment due to the gifts received.

3. Reasons for Reopening: The reasons for reopening stated that the Assessing Officer erred in accepting the gifts without proper verification and that there was a belief that income had escaped assessment due to the gifts received, leading to the notices dated 31st March, 2006.

4. Objections and Rejection: The petitioner objected to the reopening, arguing it was a change of opinion as the gift issue was considered during the initial assessment. The objections were rejected on grounds of non-disclosure of material facts related to the gifts.

5. Legal Arguments: The petitioner contended that the reopening lacked jurisdiction as the gift issue was already addressed during the initial assessment. The Respondent-Revenue argued that no opinion was formed during the initial assessment regarding the gifts received.

6. Court's Decision: The High Court held that the Assessing Officer had formed an opinion during the initial assessment that the gifts were genuine, making the reopening based on a change of opinion without jurisdiction. The Court cited precedent to support the view that when all material was before the Assessing Officer, not dealing with specific contentions did not imply lack of opinion formation.

7. Enquiry and Opinion Formation: The Court emphasized that even minimal inquiry during the initial assessment indicated opinion formation, making the assessment not amenable to reopening under Section 148 of the Act. The depth of inquiry was not the determining factor, but any level of inquiry signified opinion formation.

8. Conclusion: Both petitions were allowed, setting aside the notices dated 31st March, 2006, as the Assessing Officer had formed an opinion during the initial assessment that the gifts were genuine, rendering the reopening without jurisdiction. No costs were awarded in the matter.