2022 (7) TMI 401 - HC - Income Tax

Reopening of assessment u/s 147 - Change of opinion - validity of reasons to believe - HELD THAT - The issues on which the Assessing Officer wants to re-open an assessment, it appears from record that the same were already considered by his predecessor/Assessing Officer in course of scrutiny assessment and were accepted and the claim of the assessee/petitioner was allowed after detailed investigation by raising queries and considering the reply and supporting materials submitted by the assessee/petitioner in response to those queries in course of scrutiny assessment. As in view of these facts substantiated by record, even if there may not be any discussion in the body of the assessment order passed under Section 143(3) of the Act over which an assessee has no control as to how to an assessing officer is write an assessment order, it shall be presumed that on the aforesaid two issues/claims, in course of scrutiny assessment, Assessing Officer had already formed an opinion before allowing the said claims and action of the successor Assessing Officer reopening the relevant assessment on the very self-same material without making out any case against the assessee/petitioner that some new material has come to his knowledge or possession which were suppressed or not disclosed by the assessee/petitioner at the time of scrutiny assessment, is nothing but a mere change of opinion and in facts and circumstances of this case initiation of the impugned proceeding for reopening of assessment under Section 147 of Income Tax Act, 1961 is not sustainable in law and the impugned assessment proceeding is liable to be quashed. - Decided in favour of assessee.

Summary

Issues Involved:
1. Legality and validity of notice under Section 148 and initiation of proceedings under Section 147 of the Income Tax Act, 1961, for reopening the assessment for the assessment year 2009-10.
2. Whether the reopening of assessment is based on a mere change of opinion.

Detailed Analysis:

Issue 1: Legality and Validity of Notice under Section 148 and Initiation of Proceedings under Section 147
The petitioner challenged the notice under Section 148 and the initiation of proceedings under Section 147 of the Income Tax Act, 1961, for reopening the assessment for the assessment year 2009-10. The primary contention was that the notice was based on the same material documents already available to the assessing officer during the original scrutiny assessment under Section 143(3). During the scrutiny assessment, queries were raised regarding the claim under Section 35(2AB) and the purchase of unprocessed seeds. The petitioner had submitted audited details and supporting documents, which were considered and allowed by the assessing officer, despite no discussion in the assessment order.

Issue 2: Reopening of Assessment Based on Change of Opinion
The petitioner argued that the reopening of the assessment was merely a change of opinion. The petitioner cited the case of Marico Ltd. vs. Assistant Commissioner of Income Tax, where it was held that if an assessing officer raises a query during the assessment proceedings and the assessee responds, the non-discussion of the issue in the assessment order implies acceptance of the assessee's submission. Therefore, reopening the assessment on the same grounds without new material facts is a change of opinion and is not permissible.

The court found that the issues on which the assessment was reopened were the same as those considered during the original scrutiny assessment. The assessing officer had already formed an opinion on these issues, and there was no new material fact that warranted reopening the assessment. The court referred to the judgment in Marico Ltd., upheld by the Supreme Court, which supported the petitioner's contention that reopening based on the same material facts is a change of opinion and not sustainable in law.

Conclusion
The court concluded that the initiation of the impugned proceeding for reopening the assessment under Section 147 of the Income Tax Act, 1961, was not sustainable in law. The impugned notice under Section 148 dated 21st March 2014, and all subsequent proceedings based on this notice were quashed. The writ petition was disposed of by allowing the same, with no order as to costs.