2022 (1) TMI 373 - HC - Income Tax

Reopening of assessment u/s 147 - change of opinion to commence proceedings for reassessment - Roving enquiry - HELD THAT - AO had all materials facts before him when he made the original assessment. When the primary facts necessary for assessment are fully and truly disclosed, the AO is not entitled on change of opinion to commence proceedings for reassessment. Even if the AO, who passed the assessment order, may have raised too many legal inferences from the facts disclosed, on that account the AO who has decided to reopen assessment, is not competent to reopen assessment proceedings. Where on consideration of material on record, one view is conclusively taken by the AO it would not be open to reopen the assessment based on the very same material with a view to take another view. But from the reasons, it appears that the Assessing Officer is proceeding purely on the basis of suspicion because he is unable to comprehend how a person, whose income has been assessed at ₹ 5,22,05,840/-, would have invested ₹ 95.33 Crores. An Assessing Officer is not permitted to make a roving inquiry. We are, therefore, not satisfied that the reasons given by the Assessing Officer make out any case of failure on the part of petitioner to fully and truly disclosed material facts. Once all the material were placed before the Assessing Officer and he chose not to mention about all the investments in the assessment order, it could not be contended that the Assessing Officer has not applied his mind while passing the assessment order. - notice u/s 148 quashed - Decided in favour of assessee.

Summary

Issues:
Impugning notice under Section 148 of the Income Tax Act for reopening assessment for Assessment Year 2012-2013 and order rejecting objections.

Analysis:
1. The notice dated 30th March 2019 sought to reopen the assessment based on the belief that income had escaped assessment due to failure to disclose all material facts. The Assessing Officer noted a significant difference between the declared income and investments made, leading to suspicion.

2. The petitioner argued that all investments were disclosed before the original assessment, and the Assessing Officer had considered these details. The petitioner's advocate provided documents showing investments exceeding the amount in question, well before the assessment proceedings were concluded.

3. The Court referred to a previous judgment to highlight that the Assessing Officer must show a clear failure to disclose material facts for reopening assessments. In this case, the reasons provided did not establish such a failure, as all necessary details were presented to the Assessing Officer during the original assessment.

4. It was emphasized that if all primary facts for assessment were disclosed truthfully, the Assessing Officer cannot reopen assessments based on a change of opinion. The Assessing Officer's inability to understand the investments made should not lead to suspicion-based inquiries.

5. The Court concluded that the Assessing Officer's reasons were based on suspicion rather than a failure to disclose material facts. As all relevant information was provided before, and the Assessing Officer had considered it during the original assessment, the reopening of the assessment was deemed unjustified.

6. Consequently, the Court allowed the petition, issuing a writ to quash the notice seeking to reopen the assessment for the specified year and the order rejecting objections, as there was no valid ground for reassessment based on the facts presented during the original assessment.

This detailed analysis of the judgment from the Bombay High Court outlines the key arguments, legal principles, and the ultimate decision regarding the reopening of the assessment under the Income Tax Act for the specified year.