2019 (11) TMI 215 - HC - Income Tax

Reopening of assessment u/s 147 - HELD THAT - Attention was invited to the letter dated 12.2.2015 of the Chartered Accountants of the petitioner addressed to the Assessing Officer to point out that representatives of Dharam Impex had duly attended the office of the Assessing Officer in compliance of his directives as per their intimation to the petitioner. As submitted that therefore, in connection with the transaction in question, the Assessing Officer had summoned the party and had duly verified the same and thereafter, had passed the assessment order. As submitted that therefore, it is evident that the Assessing Officer seeks to reopen the assessment on a mere change of opinion. As regards the second ground on which the assessment is sought to be reopened viz. that the petitioner had made a bogus claim of exemption under section 10AA of the Act, it was submitted that this issue was also gone into threadbare at the time of scrutiny assessment. It was submitted that even if such purchase is disallowed, the exempted profit will go up and hence, there is no escapement of income and hence, the formation of belief that the income chargeable to tax has escaped assessment on this ground, is without any basis. Having regard to the submissions advanced by the learned advocate for the petitioner, issue notice, returnable on 10.12.2019. By way of adinterim relief, respondent is restrained from proceeding further pursuant to the impugned notice dated 31.3.2019 issued under section 148 of the Act for Assessment Year 2012-13.

Issues involved:
1. Reopening of assessment beyond four years.
2. Validity of reasons recorded for reopening assessment.
3. Fresh material for reopening assessment under section 147 of the Income Tax Act, 1961.
4. Change of opinion as a ground for reopening assessment.
5. Claim of exemption under section 10AA of the Act.
6. Escapement of income and formation of belief for reopening assessment.

Analysis:
1. The petitioner's counsel argued that the assessment sought to be reopened beyond the four-year period lacked any indication that the petitioner had not fully disclosed material facts. The first ground for reopening was a statement recorded under section 132(2) of the Act, which the counsel contended did not constitute fresh material as a scrutiny assessment had already been conducted post that statement. The counsel highlighted that the Assessing Officer's attempt to reopen the assessment seemed like a mere change of opinion rather than a valid reason under section 147.

2. The counsel further pointed out that during the scrutiny assessment, the issue had been thoroughly examined, and the Assessing Officer had summoned the concerned party and verified the transaction in question. The petitioner had provided details of sundry creditors, including Dharam Impex, with the amount specified. The counsel argued that the Assessing Officer's decision to reopen the assessment based on a supposed bogus claim of exemption under section 10AA was unfounded as this issue had already been addressed during the scrutiny assessment. The counsel emphasized that disallowing the purchase would not lead to an escapement of income, rendering the belief of income escaping assessment on this ground baseless.

3. Considering the submissions made by the petitioner's counsel, the court issued a notice returnable on a specified date and granted ad interim relief by restraining the respondent from further proceedings based on the impugned notice issued under section 148 of the Act for the relevant assessment year. Direct service was permitted for the notice.

This detailed analysis highlights the arguments presented by the petitioner's counsel regarding the lack of valid reasons for reopening the assessment, the absence of fresh material, the issue of change of opinion, and the thorough examination of the relevant matters during the scrutiny assessment, ultimately leading to the court's decision to issue a notice and provide interim relief.

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