2021 (11) TMI 812 - HC - Income Tax

Reopening of assessment u/s 147 - Assessment sought to be reopened after a period of 4 years - HELD THAT - The criterion for reopening of assessment after a period of 4 years are no longer res-integra in view of the Judgment of Division Bench of this Court in the case of Ananta Landmark (P.) Ltd. 2021 (10) TMI 71 - BOMBAY HIGH COURT wherein this Court held that where assessment was not sought to be reopened on reasonable belief that income had escaped assessment on account of failure of assessee to disclose truly and fully all material facts that were necessary for computation of income but was a case wherein assessment was sought to be reopened on account of change of opinion of Assessing Officer about manner of computation of deduction under section 57, reopening was not justified. When the primary facts necessary for assessment are fully and truly disclosed, the Assessing Officer is not entitled to a change of opinion for commencing proceedings for reassessment. It is also held that when on consideration of the material on record, one view is conclusively taken by the Assessing Officer, it would not be open for the Assessing Officer to reopen assessment based on the very same material and to take another view. In the facts of the present case, in view of reply filed by Petitioner (Exh.B), it is clear that the Assessing Officer was aware of the issue of AIR and ITS data. Once the Assessing Officer had applied his mind in regular assessment proceeding of Petitioner having sold 29 flats, it is not open for Assessing Officer to reopen the assessment in absence of material to show escapement of income. See Aroni Commercial Limited 2014 (2) TMI 659 - BOMBAY HIGH COURT and in Marico Ltd 2019 (8) TMI 1337 - BOMBAY HIGH COURT AO is reopening the assessment merely on the basis of change of opinion which is not permissible and hence could not have issued a notice of re-opening of assessment to Petitioner. - Decided in favour of assessee.

Summary

Issues:
Challenge to notice under Section 148 of Income Tax Act, 1961
Validity of notice under Section 143(2) of the Income Tax Act
Legality of notice under Section 142(1) of the Income Tax Act
Rejection of objections to re-assessment proceedings
Sanction granted under Section 151 of the Income Tax Act

Analysis:

The petitioner, a real estate developer, challenged various notices issued under the Income Tax Act, including one under Section 148 for escaping assessment. The petitioner had initially offered income based on the project completion method up to AY 2011-12. Following a survey in 2012, a revised return was filed for AY 2012-13. During scrutiny, details of transactions were sought, and the petitioner explained the discrepancies, leading to no additions to income. However, a notice under Section 148 was issued in 2019, alleging income escapement due to unreported turnover.

The petitioner contended that the re-opening of assessment was a mere change of opinion, citing the precedent in CIT Vs. Kelvinator of India Ltd. The respondent argued that the original assessment was flawed and justified the re-assessment. The court found that the Assessing Officer had applied his mind during the original assessment, and the re-opening lacked tangible material for income escapement.

The court referenced the Ananta Landmark case, emphasizing that when primary facts are fully disclosed, a change of opinion is not grounds for reassessment. The court noted that the Assessing Officer was aware of the transaction details during the original assessment and concluded that the re-assessment was impermissible as it was solely based on a change of opinion.

In light of the above analysis, the court quashed and set aside all impugned notices and sanctions, ruling in favor of the petitioner. The court held that the re-opening of assessment lacked legal basis and was not permissible under the law, thereby granting relief to the petitioner.