2019 (12) TMI 252 - HC - Income Tax

Reopening of assessment u/s 147 - income chargeable to tax has escaped assessment on the basis of information and details available on record - HELD THAT - All the material necessary for assessment was duly produced before the AO at the time of scrutiny assessment, and it is on the basis of such material that the AO has considered the claim of the petitioner for deduction u/s 80IB (3) of the Act. By no stretch of imagination can it be said that there was any failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for the year under consideration, so as to attract the first proviso to section 147 of the Act. Under the circumstances, in the absence of any failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment, the AO is not justified in reopening the assessment beyond a period of four years from the end of the relevant assessment year. On both counts the petition must succeed, namely that the reopening of assessment is based on a mere change of opinion; and the assumption of jurisdiction by the AO u/s 147 beyond a period of four years from the end of the relevant assessment year without there being any failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment, is invalid. The impugned notice issued under section 148 of the Act, therefore, cannot be sustained.

Issues Involved:
1. Whether the reopening of assessment is based on a mere change of opinion.
2. Whether the reopening of assessment beyond a period of four years from the end of the relevant assessment year is justified.

Issue-wise Detailed Analysis:

1. Whether the reopening of assessment is based on a mere change of opinion:

The petitioner challenged the notice dated 28th March 2018 issued under section 148 of the Income Tax Act, 1961, to reopen the assessment for the assessment year 2011-2012. The petitioner argued that the reopening was based on a mere change of opinion. During the original assessment under section 143(3) of the Act, the Assessing Officer had thoroughly examined the issue regarding the deduction under section 80IB(3) of the Act. The petitioner submitted multiple replies during the assessment proceedings, which were considered by the Assessing Officer before making a decision. The court noted that the Assessing Officer had examined the claim for deduction under section 80IB of the Act and had partly allowed it. Since the issue had already been scrutinized and decided upon, the reopening of the assessment on the same facts indicated a mere change of opinion. The court concluded that the reopening of the assessment was based on a mere change of opinion and thus was not justified.

2. Whether the reopening of assessment beyond a period of four years from the end of the relevant assessment year is justified:

The petitioner also contended that the notice for reopening the assessment was issued beyond the period of four years from the end of the relevant assessment year, which is not permissible unless there was a failure on the part of the petitioner to disclose fully and truly all material facts necessary for the assessment. The court highlighted that the first proviso to section 147 of the Act requires the Assessing Officer to record satisfaction that income chargeable to tax had escaped assessment due to the assessee's failure to disclose fully and truly all material facts. The court found that the reasons recorded for reopening did not indicate any such failure on the part of the petitioner. The court observed that all necessary material had been disclosed by the petitioner during the original assessment proceedings, and the Assessing Officer had considered this material before making the assessment. Therefore, the court held that the reopening of the assessment beyond the four-year period was not justified as there was no failure on the part of the petitioner to disclose fully and truly all material facts necessary for the assessment.

Conclusion:

The court concluded that the reopening of the assessment was based on a mere change of opinion and was beyond the permissible period of four years without any failure on the part of the petitioner to disclose material facts. Consequently, the court quashed and set aside the impugned notice dated 28th March 2018 issued under section 148 of the Act and all proceedings taken pursuant thereto. The petition was allowed with no order as to costs.

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