2022 (4) TMI 1080 - HC - Income Tax

Reopening of assessment u/s 147 - Eligibility of reason to believe - HELD THAT - Having gone through the materials on record, we are of the view that all the aspects of the matter sought to be relied upon for the purpose of reopening were very much before the Assessing Officer at the time when the scrutiny assessment under Section 143(3) was carried out. To this extent, Mr. Bhatt with his usual fairness conceded. We are of the view that the case is not one of any omission or failure on the part of the writ applicant in fully and truly disclosing all the relevant aspects of the matter. No new tangible material could be said to have come to the knowledge of the respondent after the framing of the assessment. The case could be said to be one of mere change of opinion - Writ application succeeds and is hereby allowed

Summary

Issues:
Challenge to the legality and validity of notice under Section 148 of the Income Tax Act, 1961 for reopening assessment for A.Y. 2014-15.

Analysis:
The writ applicant sought relief to quash the notice and stay its implementation pending the petition's disposal. The notice aimed to reopen the assessment for A.Y. 2014-15 based on various grounds, including disallowance of business loss, unabsorbed depreciation, addition of capital receipt, and disallowance of depreciation on goodwill. Objections raised against reopening were disposed of, justifying the action. The writ applicant contended that reopening was beyond the four-year period, based on a mere change of opinion, and lacked merit. The revenue argued that the notice was legal, issued with cogent reasons, and justified due to alleged escaped income. Additional grounds for reopening were highlighted, including TDS deduction failure and depreciation claim post-amalgamation.

The senior counsel for the writ applicant argued against reopening, emphasizing lack of failure in disclosure, change of opinion, lack of merit in additions, and absence of income escapement. Conversely, the revenue's senior counsel defended the notice's legality, citing returned losses, capital receipt escapement, TDS deduction failure, and improper depreciation claim post-amalgamation. The revenue highlighted additional grounds for reopening related to TDS deduction and goodwill depreciation post-amalgamation.

After considering the arguments and record materials, the Court found that all aspects for reopening were known during the initial assessment, indicating a mere change of opinion rather than new tangible material. The Court agreed that the case did not involve failure in disclosure and allowed the writ application, quashing the impugned notice.