2021 (5) TMI 844 - HC - Income Tax

Reopening of assessment u/s 147 - Change of opinion or not - Benefit of doubt - HELD THAT - The petitioner is bound to establish the reasons stated for reopening of assessment. Certain intricacies raised by the Department with reference to certain transactions are to be adjudicated in the manner known to law and the High Court cannot go into the details of such transactions so as to make a finding, which would cause prejudice to either of the parties. Such accounting transactions are to be scrutinised by the experts and such an exercise cannot be done by the High Court more specifically in a writ proceedings wherein, the very initiation of proceedings for reopening of assessment is under challenge. Even the benefit of doubt in this regard should be held in favour of the Revenue and not in favour of the assessee. Even in case where the petitioners are raising certain doubts regarding the reason to believe and if the Department arrives certain reasons in respect of factual aspects and the informations provided or the income disclosed then the High Court must in all fairness allow the Department to conduct an adjudication by affording opportunity to the assessee, so as to conclude the proceedings, and in this regard, it is to be reiterated that the benefit of doubt in certain factual aspects must be held in favour of the Revenue and not in favour of the assessee. This being the principles to be adopted, this Court has no hesitation in arriving a conclusion that there is reason to believe for reopening of assessment and the reasons furnished by the Department can not be construed as change of opinion.

Summary

Issues Involved:
1. Validity of reopening assessment under Section 147 of the Income Tax Act, 1961.
2. Limitation period for passing the reassessment order under Section 153 of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Validity of Reopening Assessment under Section 147 of the Income Tax Act, 1961:

The petitioner challenged the reopening of the assessment for the assessment year 2007-08 initiated by the Deputy Commissioner of Income Tax, Company Circle IV(1), Chennai. The petitioner contended that the reasons for reopening the assessment were already considered by the Assessing Officer during the original assessment and confirmed by the Commissioner of Income Tax (Appeals)-VI, Chennai. The petitioner argued that the reopening amounted to a change of opinion, which is not permissible under Section 147 of the IT Act. The petitioner highlighted that the interest income of ?1,55,65,851/- and the lease rent of ?3.90 crores were already adjudicated in the original assessment order and the appellate order.

The respondent argued that the reasons to believe were established, and the details and grounds raised by the petitioner should be adjudicated by the Assessing Officer. The court held that the scope of writ proceedings could not be expanded to adjudicate disputed facts and that the High Court is empowered to scrutinize the process, not the decision itself. The court found that the reasons furnished by the Department could not be construed as a change of opinion and upheld the reopening of the assessment under Section 147.

2. Limitation Period for Passing the Reassessment Order under Section 153 of the Income Tax Act, 1961:

The petitioner in W.P.No.28434 of 2014 raised the ground of limitation, arguing that the reassessment order was passed beyond the period of limitation as per Section 153 of the IT Act. The petitioner contended that the interim stay granted by the High Court expired on 08.06.2014, and the reassessment order passed on 24.10.2014 was beyond the permissible period.

The respondent relied on the final order passed in the writ petition on 04.07.2014 and argued that the period of limitation should be reckoned from the date of communication of the final order. The court acknowledged practical difficulties in listing cases on the date of expiry of interim orders and held that in the absence of any order vacating or extending the interim stay, the same position as on 08.04.2014 should continue. The court concluded that the Department acted rightly based on the final order and dismissed the writ petition challenging the reassessment order on the ground of limitation.

Conclusion:

The court dismissed both writ petitions, upholding the reopening of the assessment under Section 147 and rejecting the petitioner's contention on the limitation period for passing the reassessment order. The petitioner was advised to file a statutory appeal to raise all grounds before the appellate authority.