2018 (12) TMI 467 - HC - Income Tax

Reopening of assessment u/s 147 - validity of reason to believe - proof of change of opinion - Held that - Reading of the reasons, clearly shows that the assessing officer intended to verify the transactions as it was not disclosed by the assessee. Thus, the omission on the part of the assessee has been pointed out and the reason why the Assessing Officer wants to verify is also clear from reading the reasons for reopening. Therefore, we do not agree with the submissions of the learned counsel that no opinion was formed by the Assessing Officer for being satisfied that there is a case for reopening. The assessee has not filed the balance sheet or statement of affairs as noted by the Assessing Officer and in the return of income, the assessee has filed only statement showing computation of income consisting of salary income and interest income from other sources. Even when the reassessment proceedings were commenced by issuance of notice, dated 02.11.2011, the assessee did not file a fresh return of income, but informed the Assessing Officer to treat the return of income filed on 30.07.2009, as return in response to the notice under Section 147. Whatever was placed before the Assessing Officer through their authorized representative s letter dated 30.12.2011, cannot be taken to be full and true disclosure pertaining to the transactions with S.Nagarajan. As satisfied with the reasons assigned for reopening of assessment is just and proper and no opinion was formed during the assessment proceedings dated 30.12.2011, for it to be termed as a change of opinion , more so, when the assessee has failed to fully and truly disclose all the materials necessary for its assessment. Thus, the reasons assigned by the learned Writ Court is just and proper and does not call for any interference. - decided against assessee.

Summary

Issues Involved:
1. Validity of reopening assessment under Section 147 of the Income Tax Act, 1961.
2. Alleged failure of the assessee to disclose fully and truly all material facts.
3. Whether the reopening constitutes a change of opinion.
4. Adequacy of reasons recorded by the Assessing Officer for reopening the assessment.

Detailed Analysis:

1. Validity of Reopening Assessment under Section 147 of the Income Tax Act, 1961:
The appellant/assessee challenged the reopening of the assessment for the year 2009-2010, initially completed on 30.12.2011, under Section 147 of the Act. The reopening notice was issued on 25.03.2016, citing the need to verify the source of advances amounting to ?2.75 crores received by Mr. S.Nagarajan. The court held that the reopening was valid within the powers conferred under the Act, emphasizing that the initial assessment did not cover the advances made by the assessee, and the new information warranted a reassessment.

2. Alleged Failure of the Assessee to Disclose Fully and Truly All Material Facts:
The court found that the assessee failed to disclose fully and truly all material facts necessary for the assessment. The initial reassessment proceedings focused on verifying cash deposits of ?93,00,000/- in the Axis Bank account, but did not address the ?2.75 crores advanced to S.Nagarajan. The court noted that the assessee did not file a balance sheet or statement of affairs, and the return of income filed only included salary income and interest income from other sources, which indicated incomplete disclosure.

3. Whether the Reopening Constitutes a Change of Opinion:
The appellant argued that the reopening was a change of opinion, as all necessary details, including the cash flow statement, were provided during the first reassessment. However, the court concluded that the initial reassessment did not form an opinion on the advances to S.Nagarajan, and the new reopening was based on tangible material not previously considered. Thus, the reopening did not constitute a change of opinion but was justified due to the assessee's failure to disclose all material facts.

4. Adequacy of Reasons Recorded by the Assessing Officer for Reopening the Assessment:
The court reviewed the reasons communicated by the Assessing Officer for reopening the assessment, which focused on verifying the source of the ?2.75 crores advance. The court found that the reasons were adequately recorded, and the Assessing Officer had formed a reasonable belief that income had escaped assessment due to the assessee's non-disclosure. The court rejected the appellant's contention that the reasons for reopening were insufficient or constituted a fishing inquiry.

Conclusion:
The court upheld the reopening of the assessment under Section 147, finding that the assessee had not fully and truly disclosed all material facts necessary for the assessment. The reopening was not a change of opinion, and the reasons recorded by the Assessing Officer were adequate and justified. Consequently, the Writ Appeal was dismissed, and the connected Miscellaneous Petitions were closed.