2016 (1) TMI 28 - AT - Income Tax

Reopening of assessment - Held that - Reason recorded for issuing notice under section 148 clearly indicates that the reopening done without even an allegation that the assessee has failed in its statutory obligation to disclose fully and truly the material facts necessary for the computation of income and as such cannot be held to be valid in law and need to be cancelled on this primary ground only. There is not even an allegation in the reasons that assessee has failed to disclose fully and truly all material facts for the computation of its income. See Minda Industries case 2015 (6) TMI 804 - ITAT DELHI In the present case both the authorities below have gone wrong in deciding the reopening as valid. However, it is established that that in the present case the issue reopening of assessment is incorrect and invalid. Therefore, quash the orders of the authorities below on this legal issue and decide the same in favor of the assessee.

Summary

Issues:
1. Validity of reopening the assessment under section 147 of the Income Tax Act.
2. Addition of loan amounts in the assessment.

Analysis:
1. Validity of Reopening Assessment:
The appeal challenged the reopening of the assessment under section 147 of the Income Tax Act. The Assessee contended that the reopening lacked a live nexus in the reasons recorded and the facts of the case. The Assessee argued that the AO had no fresh material to form an opinion regarding the escapement of assessment, indicating a mere change of opinion. The Tribunal found that the Assessee had made full and true disclosures during the original assessment proceedings. The Tribunal cited various decisions, including the case of CIT vs. Kelvinator of India Limited, to establish that a mere change of opinion is not a valid reason for reopening an assessment. The Tribunal concluded that the reopening was invalid due to a lack of tangible material and upheld the appeal in favor of the Assessee.

2. Addition of Loan Amounts:
The Assessee contested the addition of loan amounts in the assessment, arguing that the additions were confirmed by misinterpreting facts and arbitrarily rejecting explanations and evidence submitted. The Tribunal did not delve into the merits of this issue as the reopening of the assessment was deemed invalid. Therefore, no findings were given on the grounds related to the addition of loan amounts.

In conclusion, the Appellate Tribunal, ITAT Delhi, ruled in favor of the Assessee, quashing the reopening of the assessment under section 147 of the Income Tax Act due to a mere change of opinion without fresh material. The Tribunal did not address the grounds related to the addition of loan amounts as the invalidity of the reopening made further analysis unnecessary.