2021 (7) TMI 133 - AT - Income Tax

Reopening of assessment u/s 147 - HELD THAT - We are of the considered view that the AO has considered the return of income, computation of income, balance sheet, profit and loss account and tax audit report and raised queries and reviewed the reply of the assessee. We find that from these very records, the AO noted and formed a belief that income has escaped assessment which means that there was no new tangible material or information. The relevant note to the balance sheet shows that the Assessing Officer wants to re-examine/review the very same note for assumption of jurisdiction u/s. 148 of the Act. In our considered opinion, this is nothing but change of opinion and absence of tangible new material. We are of the considered view that on the basis of the same assessment record as was filed by the assessee during the original assessment proceedings and also scrutinised by the Assessing Officer, before passing original assessment order u/s. 143(3) of the Act is the basis for seeking reopening of the assessment. Reasoning given by the Assessing Officer for reopening assessment is nothing but change of opinion and a new approach to the existing facts. Therefore, the impugned reassessment notice cannot be sustained and is hereby quashed.

Issues Involved:
1. Validity of assuming jurisdiction u/s. 147 of the Income Tax Act, 1961.
2. Reduction of the cost of plant and machinery block of Fixed Assets.
3. Review of the same set of facts for reopening the completed assessment.
4. Consideration of the same assessment record for seeking reopening of the assessment.
5. Quashing of the reassessment notice due to change of opinion.

Analysis:

Issue 1: Validity of assuming jurisdiction u/s. 147 of the Income Tax Act, 1961
The appeal challenged the action of the Assessing Officer in assuming jurisdiction u/s. 147 of the Income Tax Act, contending that the reassessment order was invalid in law. The Tribunal noted that the Assessing Officer reviewed the same set of facts considered during the original assessment proceedings, indicating a lack of new tangible material or information to justify reopening the assessment. Citing legal precedents, the Tribunal held that the reassessment order lacked a valid basis for assuming jurisdiction under section 147, as it amounted to a change of opinion rather than being supported by new evidence.

Issue 2: Reduction of the cost of plant and machinery block of Fixed Assets
The appellant contested the reduction of the cost of plant and machinery block of Fixed Assets by the Assessing Officer, leading to a decrease in the claim of depreciation. The Tribunal observed that the Assessing Officer's actions were based on the waiver of a loan related to the acquisition of assets. However, the Tribunal found that the reassessment lacked a valid foundation due to the absence of new material or information to support the reduction. Consequently, the Tribunal ruled in favor of the appellant on this issue.

Issue 3: Review of the same set of facts for reopening the completed assessment
The Tribunal scrutinized the reasons recorded for reopening the completed assessment and highlighted that the Assessing Officer sought to re-examine the same statement of accounts used in the original assessment order. This led the Tribunal to conclude that the reassessment was based on a review of existing facts, indicating a change of opinion rather than a valid reason to reopen the assessment.

Issue 4: Consideration of the same assessment record for seeking reopening of the assessment
The Tribunal emphasized that the Assessing Officer's decision to reopen the assessment was solely based on the same assessment record filed during the original assessment proceedings. This lack of new tangible material or information to support the reassessment led the Tribunal to quash the reassessment notice.

Issue 5: Quashing of the reassessment notice due to change of opinion
In light of the above analysis and legal precedents, the Tribunal concluded that the reassessment notice could not be sustained due to being a result of a change of opinion rather than new evidence. Consequently, the Tribunal allowed the appeal of the assessee, quashing the reassessment order for want of jurisdiction.

In summary, the Tribunal's judgment focused on the lack of new tangible material or information to justify the reopening of the assessment, emphasizing the importance of valid reasons to assume jurisdiction under section 147 of the Income Tax Act, 1961. The decision highlighted the legal principles surrounding change of opinion and the necessity for objective facts to support reassessment actions.

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