2023 (6) TMI 1289 - HC - Income Tax

Reopening of assessment u/s 147 - notice after a period of four years - Reasons to believe - Whether case reopened on account of change of opinion ? - Reopening based on the order of SEBI in cases of reversal trades and accommodation entries - HELD THAT - The criteria for reopening of assessment after a period of four years are no longer res integra in view of the judgment of this Court in the case of Ananta Landmark P. Ltd 2021 (10) TMI 71 - BOMBAY HIGH COURT wherein this Court held that, where assessment was not sought to be reopened on the reasonable belief that income had escaped assessment on account of failure of assessee to disclose truly and fully all material facts that were necessary for computation of income, but was a case wherein assessment was sought to be reopened on account of change of opinion of AO the reopening was not justified. Where primary facts necessary for assessment are fully and truly disclosed the AO is not entitled to reopen the assessment on a change of opinion. Also held that while considering the material on record, when one view is conclusively taken by AO, it would not be open for the AO to reopen the assessment based on the very same material and take another view. In the present case, the Respondent No. 1 has received information from ITO (I CI) Unit 2(3) Mumbai, that SEBI passed orders in cases of reversal trades and accommodation entries. Even though the Petitioner has explained the transactions done, through note No. 17 submitted along with the Profit and Loss Account and other supporting documents, the Respondents have mindfully taken a stand, that at this stage, they are not required to look into the sufficiency and correctness of the information and can consequently reopen the case. Once the Petitioner provided the all the details, explanations and documents against the reasons for reopening. AO considering the principle of shifting of onus under the evidence act, must necessarily carefully examine the material and then give particulars and reason/s to disbelieve the assessee, whilst rejecting the objections, to shift the onus on the assessee, as failure to do so, does not discharge the onus shifted upon him (AO) by the assessee by submitting all documents and explanations, and provides no reason for the Court to disbelieve the assessee. There is an essential distinction between burden of proof and onus of proof burden of proof lies upon a person who has to prove the fact and which never shifts. Onus of proof shifts. Such a shifting of onus is a continuous process in the evaluation of evidence. See R V E Venkatachala Gounder v Arulmigu Vishwesaraswami V. P. Temple anr. 2003 (10) TMI 639 - SUPREME COURT As evinced that there is no live link or nexus with the alleged orders passed by SEBI as alleged by the Respondent. Besides the Respondent has failed to aver the particulars of the information available which has led to the belief that income has escaped assessment. There appears no new tangible material available on record to conclude that income had escaped assessment. In our view it is clearly a change of opinion . Decided in favour of assessee.

Summary

Issues:
The judgment involves the assessment years 2015-16 and 2016-17, challenging the notice under section 148 of the Income-tax Act, 1961 for reassessment of income.

Assessment and Reassessment:
The Petitioner challenged the notice issued proposing to reassess the income for AY 2015-16, based on information received regarding trading in shares. The Respondent contended that the Petitioner failed to disclose all material facts during the original assessment.

Response to Reasons for Reopening:
The Petitioner provided detailed explanations and documents in response to the reasons for reopening, highlighting profits earned from derivative transactions and intraday trading. The Petitioner argued that all necessary details were disclosed during the original assessment.

Rejection of Objections:
The Respondent rejected the objections raised by the Petitioner, emphasizing that the sufficiency or correctness of material is not a consideration at the stage of reopening assessment. The Respondent relied on previous judgments to support their position.

Legal Precedents and Burden of Proof:
The judgment referred to previous cases to establish the criteria for reopening assessments after a period of four years. It emphasized the need for a rational connection between the material available and the belief that income has escaped assessment. The burden of proof was discussed in relation to the evidence provided by the Petitioner.

Court's Decision:
The Court quashed and set aside the notices and orders issued for AY 2015-16 and 2016-17, citing a lack of new tangible material to support the belief that income had escaped assessment. The Court highlighted the absence of a live link or nexus with the alleged orders passed by SEBI, indicating a 'change of opinion' rather than a valid reason for reassessment.

Conclusion:
The judgment focused on the necessity of a direct connection between the material available and the belief of income escapement, ultimately leading to the quashing of the notices and orders issued by the Respondent.