2021 (12) TMI 307 - AT - Income Tax

Reopening of assessment u/s 147 - Change of opinion - reopening of concluded assessment - proof of fresh material or information with AO to reopen the assessment - directions to rectify the assessee s claim for deduction u/s 36(1)(viii) - HELD THAT - On a perusal of the reasons to believe on the basis of which the case of the assessee had been reopened, we find, that it is a matter of fact borne from the record that no new information/material had came to the notice of the A.O (after completion of the original assessment) which would have justified the reopening of the assessment u/s 147 - as observed by the A.O, and rightly so, a perusal of the opening line of the reasons recorded for reopening the case of the assessee, viz. On perusal of balance sheet and computation of income, it is observed that during the year under consideration, the assessee has transferred an amount of ₹ 410.00 crore to special reserve, while the corresponding deduction u/s 36(1)(vii) of the Act has been claimed at ₹ 456.43 crore ,reveals beyond any scope of doubt that the A.O had reopened the concluded assessment only on the ground that the assessee had claimed an excess deduction of ₹ 46.43 crore, which in our considered view is nothing but clearly an attempt on his part to review/re-examine the assessee s claim for deduction on the basis of the same material/accounts/workings/computation as were available before his predecessor at the time of framing of the original assessment, vide his order passed u/s 143(3). We are of a strong conviction that in the garb of reopening the case of the assessee he had on the basis of the same set of facts as were available on record at the time of framing of the original assessment, tried to substitute his view as against that of his predecessor. In fact, we are unable to comprehend as to what new material or information had came to the notice of the A.O after the framing of the original assessment, which would have justified the reopening of its case. As can safely be gathered from a perusal of the reasons to believe, we are of the considered view that the A.O with the sole objective of substituting his view as against that of his predecessor had sought to reopen the case of the assessee bank. We are afraid that such a substitution of a view of a successor A.O cannot form a justifiable basis for reopening the case of an assessee. As decided in the case of CIT Vs. Kelvinator of India 2010 (1) TMI 11 - SUPREME COURT that merely on the basis of a change of opinion the case of an assessee cannot be reopened. We, thus, in the backdrop of our aforesaid observations finding no infirmity in the view taken by the CIT(A) who had rightly struck down the assessment order passed by the A.O under Sec. 147 r.w.s 143(3), dated 12.03.2013 by holding the reopening of the assessment as bad in law, uphold the same - Decided in favour of assessee.

Issues Involved:
1. Validity of reopening assessment under section 147 of the Income Tax Act, 1961.
2. Whether the reopening of assessment was based on a change of opinion.
3. Whether the reopening was justified without new information or material.
4. Whether the reopening was based on an audit objection.
5. Whether the CIT(A) erred in not adjudicating the merits of the case.

Detailed Analysis:

1. Validity of Reopening Assessment under Section 147:
The primary issue was whether the reopening of the assessment under section 147 was valid. The CIT(A) concluded that the reopening was invalid because it was based on a mere change of opinion without any new information or material. The Tribunal upheld this view, stating that the Assessing Officer (A.O) had no fresh material to justify the reopening.

2. Reopening Based on Change of Opinion:
The CIT(A) and the Tribunal found that the A.O had reopened the assessment based on the same material that was available during the original assessment. This constituted a change of opinion, which is not permissible under the law. The Tribunal cited the Supreme Court's ruling in CIT vs. Kelvinator of India Ltd., which held that reopening based on a mere change of opinion is invalid.

3. Lack of New Information or Material:
The Tribunal emphasized that for a valid reopening under section 147, there must be new tangible material or information that was not available during the original assessment. In this case, the A.O had no new information or material, and the reopening was based solely on re-examining the same facts and documents already considered.

4. Reopening Based on Audit Objection:
The CIT(A) noted that the reopening was also based on an audit objection, which is not a valid ground for reopening an assessment. The Tribunal agreed, reinforcing that the A.O had wrongly assumed jurisdiction based on an audit objection without any fresh material.

5. Non-Adjudication of Merits by CIT(A):
The revenue argued that the CIT(A) erred by not adjudicating the merits of the case. The Tribunal dismissed this grievance, stating that once the reassessment order was quashed as invalid, there was no need to adjudicate the merits.

Conclusion:
The Tribunal upheld the CIT(A)'s decision to quash the reassessment order, concluding that the reopening of the assessment was invalid and based on a mere change of opinion without any new material or information. The appeal filed by the revenue was dismissed.

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