2016 (5) TMI 580 - HC - Income Tax

Reopening of assessment - share capital received - Held that - The present case is one of change of opinion. The questionnaire and particularly question B.1 specifically raise the issue with regard to share capital. It requires the petitioner to give a list, source, genuineness, identity of the share holders along with confirmation copies of the ledger account of the party including confirmation of the mode, date, address and acknowledgement of return, etc. from the said party along with source and relevant bank entries. The said information was provided by the assessee. After receipt of the said information, Assessing Officer did not think it fit to make an addition and, under these circumstances, no addition itself amounts to forming an opinion as has been held in Usha International Ltd. (2012 (9) TMI 767 - DELHI HIGH COURT ). Therefore, in our view, the present exercise of issuing the notice under Section 148 of the Act would amount to nothing but a change of opinion, which is not permissible.In the present case also, there is not even a whisper of any allegation that there has been a failure on the part of the assessee to disclose fully and truly all material particulars necessary for assessment. - Decided in favour of assessee

Summary

Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961.
2. Alleged failure of the assessee to fully and truly disclose all material particulars necessary for assessment.
3. Whether the re-assessment proceedings constitute a change of opinion.

Detailed Analysis:

1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961:
The writ petition challenges the notice dated 27.03.2014 issued under Section 148 of the Income Tax Act, 1961, and the consequent proceedings, including the order dated 23.02.2015 dismissing the objections filed by the petitioner. The primary contention is that the re-assessment proceedings were initiated after a period of four years from the end of the relevant assessment year, without the pre-condition of failure on the part of the assessee to fully and truly disclose all material particulars necessary for the assessment being satisfied.

2. Alleged failure of the assessee to fully and truly disclose all material particulars necessary for assessment:
The original assessment under Section 143(3) was completed on 07.10.2009. During the original proceedings, a detailed questionnaire was issued by the Assessing Officer, specifically querying the share application money. The assessee responded with comprehensive details, including the shareholders' addresses, PAN numbers, number of shares, and confirmation letters from each shareholder. The Assessing Officer, after examining these details, framed the assessment without making any additions. The court noted that there was no allegation in the reasons for re-assessment that the assessee had failed to disclose fully and truly all material particulars necessary for assessment.

3. Whether the re-assessment proceedings constitute a change of opinion:
The court observed that the issue of share application money was specifically raised and addressed during the original assessment proceedings. The Assessing Officer, after receiving and examining the information, did not make any additions, which amounts to forming an opinion. The court referred to the case of CIT vs. Usha International Ltd. (2012) 348 ITR 485 (Delhi) (FB), which held that re-assessment proceedings would be invalid if an issue or query was raised and answered by the assessee in original assessment proceedings, but no addition was made by the Assessing Officer. The court concluded that the present case was one of change of opinion, which is not permissible.

Conclusion:
The court held that the impugned notice under Section 148 and the proceedings consequent thereto amounted to a change of opinion and were invalid. Additionally, the pre-condition of failure on the part of the assessee to fully and truly disclose all material particulars necessary for assessment was not satisfied. Consequently, the writ petition was allowed, and the impugned notice dated 27.03.2014 and all proceedings consequent thereto, including the order dated 23.02.2015, were quashed/set aside. There was no order as to costs.