2015 (9) TMI 791 - AT - Income Tax

Validity of reassessment proceedings - Held that - In the course of original assessment proceedings, not only all the necessary details were on record, a specific question with respect to unrealized rent was raised during the assessment proceedings, this fact was duly recorded in the proceedings sheet before the Assessing Officer. We have perused the assessment records and we are satisfied about this fact. In this view of the matter, as the assessee, rightly submits that the reopening of the assessment is nothing but review of the decision of the predecessor Assessing Officer on the same set of facts and without any fresh evidence or material coming to the record. This, as is the settled legal position, is not permissible under the scheme of the Act. For the reasons set out above, we uphold the grievance of the assessee against reopening of the assessment. As the reassessment itself is quashed, all other issues raised in this appeal are rendered academic and infructuous - Decided in favour of assessee.

Issues Involved:
1. Validity of the initiation of reassessment proceedings under Section 147 of the Income Tax Act, 1961.
2. Examination of the Assessing Officer's reasons for reopening the assessment.
3. Consideration of whether the reassessment constitutes a mere change of opinion.
4. Analysis of the legal precedents and their applicability to the case.

Issue-wise Detailed Analysis:

1. Validity of the initiation of reassessment proceedings under Section 147 of the Income Tax Act, 1961:
The primary issue raised by the appellant was the validity of the reassessment proceedings initiated by the Assessing Officer (AO) under Section 147 of the Income Tax Act, 1961. The appellant challenged the order dated 20th December 2011, passed by the Commissioner of Income Tax (Appeals) [CIT(A)], which upheld the initiation of reassessment proceedings.

2. Examination of the Assessing Officer's reasons for reopening the assessment:
The AO reopened the assessment by recording the following reasons on 04.03.2010:
"In this case the assessment u/s 143(3) of the I. T. Act-1961 was passed on 19.12.2008. On verification of the case records, it is seen that the assessee has already claimed 30% Standard Deduction out of the rental income shown during the four years on Rs. 32,63,499/-. It has also seen that the assessee has similar amount shown of Rs. 12,75,783/- in schedule of Sundry Debtors in the name of M/s Panchjanya Institute of Commerce and Management Studies as on 31.03.2006. Though the amount is same, name of party i.e. sundry debtor is different in as much as that as per rent lease agreement, the lessee is Panchajanya Education and Research Trust. There is also question under which accounting system, the said claim of deduction on account of unrealised rent is being made. The assessee has not either made any provision for bad debts or it has not written it off from the books of accounts because, the said mount of Rs. 12,75,783/- is very much appearing in the account of the sundry debtor as per schedule 6 of the balance sheet s on 31.03.2006."

3. Consideration of whether the reassessment constitutes a mere change of opinion:
The CIT(A) rejected the appellant's grievance, stating that the AO had reason to believe that the appellant's income had escaped assessment. The CIT(A) referenced the Supreme Court decision in the case of Kelvinator of India and other relevant judgments, emphasizing that reopening is justified even if the material is already on record, particularly if the AO had not formed any opinion on the issue during the original assessment.

However, the appellate tribunal found that the reassessment constituted a mere change of opinion. The tribunal noted that all necessary details were on record during the original assessment, and a specific question regarding unrealized rent was raised and recorded in the proceedings sheet before the AO. Therefore, the reopening of the assessment was deemed a review of the predecessor AO's decision without any fresh evidence or material, which is not permissible under the scheme of the Act.

4. Analysis of the legal precedents and their applicability to the case:
The tribunal referred to several legal precedents, including the judgments of the jurisdictional High Court in the cases of Praful Chunnilal Patel vs. ACIT and Raymon Glues and Chemicals vs. DCIT. These judgments clarified that the AO cannot sit in judgment over the decision of the earlier AO who passed the order under Section 143(3) of the Act. The tribunal concluded that the reassessment was not justified as it was based on the same set of facts without any new material.

Conclusion:
The tribunal upheld the grievance of the assessee against the reopening of the assessment, quashing the reassessment proceedings. Consequently, all other issues raised in the appeal were rendered academic and infructuous. The appeal was allowed, and the judgment was pronounced in the open Court on 31st August 2015.

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