2020 (10) TMI 845 - HC - Income Tax

Reopening of assessment u/s 147 - assessment was reopened after a period of four years on the ground that income chargeable to tax has escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment for the concerned - Tribunal held that on going through the orders passed by the AO and the CIT(A) and the materials, which was placed before the Tribunal, AO has reopened the assessment based on the materials, which were already available on record and it is a mere change of opinion - HELD THAT - Revenue seeks to re-argue the factual position, which is impermissible in an appeal under Section 260A of the Act, where, we are required to decide only Substantial Questions of Law, which arises for consideration. The power conferred on this Court under Section 260 A of the Act is not to act as a third Appellate Court over the orders passed by the Tribunal. We find from the grounds raised before us that there is nothing brought on record by the Revenue to show that the order passed by the Tribunal was factually incorrect or for that matter, the order passed by the CIT(A). No substantial question of law.

Issues:
1. Validity of reassessment proceedings under Section 147 of the Income Tax Act, 1961.
2. Justifiability of quashing reassessment by the Income Tax Appellate Tribunal.
3. Application of Limitation under Section 147(1) proviso for reassessment.

Analysis:

Issue 1: Validity of reassessment proceedings under Section 147
The case involved the reopening of the assessment for AY 2004-05 after four years, alleging that income had escaped assessment due to the failure of the assessee to disclose all material facts. The Assessing Officer sought to reopen the assessment based on issues related to deductions claimed and valuation of closing stock. The assessee contested the reopening, arguing that the original assessment was already completed after due process and there was no failure to disclose material facts. The CIT(A) agreed with the assessee, citing the principle of change of opinion and relevant case law. The High Court noted that the reopening seemed to be a mere change of opinion without new material facts being presented, as required for valid reassessment under Section 147.

Issue 2: Justifiability of quashing reassessment by the Tribunal
The Revenue challenged the CIT(A)'s decision by appealing to the Tribunal. The Tribunal, after reviewing the facts and decisions of lower authorities, found that the Assessing Officer did not identify any new material facts necessary for assessment that were not disclosed during the original assessment. It concluded that the reassessment was based on existing records and amounted to a change of opinion, referencing the Supreme Court's ruling in the case of CIT Vs. Kelvinator of India Ltd. The Tribunal dismissed the appeal, upholding the quashing of the reassessment.

Issue 3: Application of Limitation under Section 147(1) proviso
The Tribunal also considered the applicability of the Limitation under Section 147(1) proviso, holding that the reassessment proceedings were barred by limitation due to the absence of failure on the part of the assessee to disclose material facts during the original assessment. This aspect further supported the decision to quash the reassessment.

In the final judgment, the High Court emphasized that the appeal under Section 260A was limited to substantial questions of law and not a reevaluation of factual findings. As the Revenue failed to demonstrate any legal errors in the Tribunal's decision or the CIT(A)'s order, the High Court found no legal issues warranting consideration. Consequently, the appeal was dismissed, affirming the Tribunal's decision to quash the reassessment.

← Previous Next →