2022 (5) TMI 1224 - AT - Income Tax

Reopening of assessment u/s.147 r.w.s. 148 - non deduction of tds u/s 194C on loading / sorting expenses and towards container stuffing charges - Reopening beyond period of four years - Argument of violation of first proviso to section 147 of the Act as the original assessment was completed u/s.143(3) of the Act and there is no failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of the assessee for the relevant assessment year - HELD THAT - AO in the reasons recorded noted that there is no evidence for deduction of TDS as per column 27(a) of the Form No.3CD i.e., audit report filed by the assessee along with the return of income. It means that the assessee has filed the complete details of particulars before the AO and from very return of income the AO has chosen these reasons. We noted that this issue is squarely covered in favour of assessee assessee and against the Revenue by the decision of Hon ble Supreme Court in the case of CIT vs. Kelvinator of India Ltd. 2010 (1) TMI 11 - SUPREME COURT as considered that there cannot be change of opinion based on the material which was already available with the AO at the time of original assessment. The Hon ble Supreme Court further held that there should be some tangible material came to the notice of the AO after completion of assessment and on that basis reopening can be done. In the present case, reopening is beyond 4 years and the assessee s case falls under the proviso to section 147 of the Act and there is no failure on the part of the assessee to disclose material facts necessary for its assessment truly and correctly for the relevant assessment year as the assessee has filed details towards loading / sorting expenses and towards container stuffing charges. Hence, even otherwise there is change of opinion in view of the decision of Hon ble Supreme Court in the case of Kelvinator India Pvt. Ltd., supra. Hence, we quash the reopening and allow this jurisdictional issue in favour of the assessee.

Summary

Issues:
1. Validity of reopening of assessment u/s.147 r.w.s. 148 of the Act beyond 4 years.
2. Compliance with the first proviso to section 147 of the Act regarding disclosure of material facts.
3. Consideration of change of opinion by the Assessing Officer.

Issue 1: Validity of Reopening of Assessment:
The appeal concerns the validity of reopening the assessment u/s.147 r.w.s. 148 of the Act beyond 4 years. The appellant challenges the action of the AO in upholding the reopening of assessment, contending that the original assessment was completed u/s.143(3) of the Act. The AO issued a notice for reopening after the expiry of 4 years, citing the non-deduction of TDS as the reason for reassessment. The CIT(A) rejected the appellant's challenge, stating that the appellant had not disclosed all material facts necessary for assessment, thereby upholding the reopening. However, the Tribunal noted that the issue was covered in favor of the assessee by the decision of the Hon'ble Supreme Court in the case of CIT vs. Kelvinator of India Ltd. The Tribunal held that there was no failure on the part of the assessee to disclose material facts, and the reopening was quashed in favor of the assessee.

Issue 2: Compliance with First Proviso to Section 147:
The appellant argued that the reopening of assessment violated the first proviso to section 147 of the Act as the original assessment was completed u/s.143(3), and there was no failure to disclose material facts. The AO disallowed certain expenses for non-deduction of TDS, invoking section 40(a)(ia) of the Act. The CIT(A) upheld the reassessment, stating that the appellant had not disclosed all material facts necessary for assessment. However, the Tribunal, referencing the decision in Kelvinator of India Ltd., held that the reopening was beyond 4 years and there was no failure on the part of the assessee to disclose material facts. Consequently, the reopening was quashed in favor of the assessee.

Issue 3: Consideration of Change of Opinion:
The appellant contended that the AO changed his opinion regarding the assessment, contrary to the Supreme Court ruling in the case of CIT vs. Kelvinator of India Ltd. The Tribunal noted that the AO's reasons for reopening were based on information already available during the original assessment. Citing the Supreme Court's decision, the Tribunal emphasized that there must be tangible material coming to the notice of the AO after the original assessment for a valid reopening. As there was no new material, the Tribunal quashed the reopening, ruling in favor of the assessee.

In conclusion, the Tribunal allowed the appeal filed by the assessee, quashing the reopening of assessment and deciding in favor of the assessee on the jurisdictional issue. The Tribunal's decision was based on the lack of failure to disclose material facts, the violation of the first proviso to section 147, and the absence of new tangible material for a valid reopening, as per the Supreme Court's ruling in the Kelvinator of India Ltd. case.