2020 (9) TMI 1017 - HC - Income Tax

Reopening of assessment u/s 147 - reopening beyond the period of four years - differences between charges received as per TDS Certificate and charges offered in the P L A/c - whether mere production of records and account books before the Assessing Officer would not necessarily amount to disclosure within the meaning of 'Disclosure' as mentioned under 1st proviso to Section 147 ? - HELD THAT - We find none to be available on record as is evident from the AO dated 30.11.2016, wherein the AO himself states that after the assessment was completed u/s 143(3) on perusal of the records, it was seen from the P L A/c that there is differences between charges received as per TDS Certificate and charges offered in the P L A/c. When the assessment was completed under Section 143(3) of the Act, this aspect, was noted by the Assessing Officer, namely the differences between the charges received as per TDS Certificate and charges offered in P L A/c and that perhaps was the reason for the Assessing Officer to record the TDS credit is as per NSDL. Tribunal was fully justified in holding that reopening the assessment beyond four years was a clear change of opinion and did not satisfy the requirements to be fulfilled in terms of 1st proviso to Section 147 of the Act. Thus, the Revenue has not made out any ground to interfere with the order passed by the Tribunal.

Summary

Issues:
1. Whether the Income Tax Appellate Tribunal was right in quashing the reassessment order under Section 147 of the Income Tax Act?
2. Whether the notice issued under Section 147 satisfied the legal conditions laid in the first proviso of the Act?

Analysis:
1. The appeal was filed by the Revenue against the order of the Income Tax Appellate Tribunal quashing the reassessment order. The assessee, a liasoning agent trading in medical equipment, had filed its income return, which was later selected for scrutiny. The assessment was completed under Section 143(3) of the Act, but after four years, it was sought to be reopened due to differences in charges reported. The Commissioner of Income Tax upheld the reopening based on CBDT instructions, without considering if the reopening was justified under the Act. The High Court found that the CIT(A) did not assess if income had escaped assessment due to the assessee's failure to disclose material facts.

2. The Revenue argued that the reassessment fell under the first proviso to Section 147, and the Tribunal's reasons for setting aside the assessment were incorrect. The assessee contended that all details were furnished during the original assessment, and no fresh tangible material warranted reopening. The High Court agreed, stating that the reassessment beyond four years was a change of opinion and did not meet the requirements of the first proviso to Section 147. The Tribunal's decision to quash the reassessment was upheld, and the appeal was dismissed against the Revenue.

In conclusion, the High Court held that the reassessment beyond four years was not justified, as there was no fresh tangible material to warrant reopening under the first proviso to Section 147 of the Income Tax Act. The Court found in favor of the assessee, dismissing the appeal by the Revenue and answering the substantial questions of law against them.