2023 (2) TMI 846 - AT - Income Tax

Reopening of assessment - tangible material for reopening - Scope of change of opinion - HELD THAT - Reproduction of reasons show that merely by wording the reasons differently ld AO had tried to invoke the jurisdiction of reassessment. The fundamental question in earlier assessment was the analysis of the income occurring form the deposits collected through its agent. Once the additions from were made in original assessment and re-examined in reassessment proceedings, the same could not have been subject matter of reasons to believe by merely expending the scope of enquiry of the manner and nature of deposits collected by the assessee. The order of the ld CIT(A) reflects that he had duly taken into consideration all the legal aspect of the issue with regard to reopening while sustaining the submission on behalf of the assessee. AO had certainly far stretched the powers u/s 147. There is no force in the contention of the ld DR that the ld CIT(A) has failed to invoke plenary power by looking at the special audit as in fact the special audit report and same was already available at the time of first reassessment itself. Reopening being barred by limitation provide u/s 149 - AY 1993-94 - Since amendment in section 149 restricting the limitation of period for reopening the reassessments to six years, had come into effect from 01.06.2001, which being one of the nature of amendment in procedural laws would be applicable to the case of the assessee for AY 1993-94. Reliance in this regard has been rightly placed by judgment of C. B. Richards 2012 (6) TMI 37 - DELHI HIGH COURT , Ellis Mauritius Ltd. Vs. ADIT 2012 (6) TMI 37 - DELHI HIGH COURT and Elam Vs. N. Illamathy 2020 (9) TMI 924 - MADRAS HIGH COURT and Mon Mohan Kohli 2021 (12) TMI 664 - DELHI HIGH COURT Thus on this basis also the reopening for AY 1993-94 is bad in law, which Ld. CIT(A) failed to appreciate.

Summary

Issues involved:
Reopening of assessment for Assessment Years 1990-91 to 1993-94 based on various grounds including unexplained deposits, interest charges, and failure to disclose material facts.

Issue 1: Reopening of assessment for AY 1990-91
The assessee, a non-banking finance company, faced a reassessment for AY 1990-91 based on grounds related to uncharged interest, operational expenses, and lower declared income. The Tribunal upheld the CIT(A)'s decision that there was no failure to disclose material facts, rendering the reopening invalid. The Tribunal found the AO had stretched the provisions of section 147 beyond their legal domain. The reassessment was deemed unjustified as the information was already disclosed in the initial assessment.

Issue 2: Reopening of assessments for AY 1991-92, 1992-93, and 1993-94
Similar to AY 1990-91, the reassessments for subsequent years were challenged by the assessee on the grounds of improper reopening. The CIT(A) observed that the AO had exceeded the legal scope of section 147, leading to unjustified reassessments. The Tribunal dismissed the revenue's appeals for these years, finding the reasons for reopening to be artificially expanded beyond the original issues examined.

Issue 3: Limitation for reopening assessment for AY 1993-94
In the case of AY 1993-94, an additional issue arose regarding the limitation for reopening assessments. The notice for reassessment was issued after the six-year limitation period, which was deemed invalid based on the amendment in procedural laws. Citing relevant case law, the Tribunal found the reopening for AY 1993-94 to be legally flawed due to exceeding the limitation period.

In summary, the Tribunal dismissed the revenue's appeals for AY 1991-92, 1992-93, and 1993-94, upholding the CIT(A)'s decisions that the reassessments were unjustified due to improper reopening. The reassessment for AY 1990-91 was also set aside, emphasizing the lack of new material warranting a reassessment. The issue of limitation for reopening assessments was highlighted for AY 1993-94, leading to a finding of legal invalidity.