2023 (7) TMI 239 - HC - Income Tax

Initiation of proceedings u/s 147 - Notice issued after expiry of four years - reason to believe - review v/s reopening - failure to truly and fully disclose material facts or not? - HELD THAT - Reasons for initiation of proceedings u/s 147 of the Act annexed to the Petition that are evidently premised on the statement It is seen from the case records , nothing to indicate failure to disclose any material fact. Upon examining the order u/s 143(3) r.w.s 263 as find that the AO has considered all submissions and documents and accepted the Loss to be carried forward. Also with regard to section 72A(2) of the Act, he held that the losses on the amalgamated assessee company are carried forward and on amalgamation get fresh life for further 8 years from the date of amalgamation. Thus it is not a case of inadvertence or oversight or a lacuna but clearly a change of opinion. No new tangible material available on record to conclude that income had escaped assessment. In our view it is clearly an exercise to review the original assessment order based on a change of opinion which is impermissible as held in CIT v Kelvinator of India Ltd. 2010 (1) TMI 11 - SUPREME COURT - Decided in favour of assessee.

Summary

Issues Involved:
The issues involved in the judgment are the validity of the notice issued under section 148 of the Income Tax Act for Assessment Year 2014-15 and the disposal of objections raised for reassessment.

Summary of Judgment:

Issue 1: Validity of Notice under Section 148:
The notice dated 30th March 2021 issued under section 148 of the Income Tax Act for Assessment Year 2014-15 was challenged in the petition. The proviso to section 147 of the Act applies in this case, requiring the Respondents to demonstrate a failure to disclose material facts as per the decision in Ananta Landmark (P) Ltd. v DCIT CC 5(3) Mumbai [2021] 131 taxmann.com 52. The reasons for the initiation of proceedings under section 147 were examined, and it was found that there was no failure to disclose any material fact.

Issue 2: Disposal of Objections for Reassessment:
The order dated 14th February 2022, which rejected the objections raised for reassessment, was also challenged. The Assessing Officer had considered all submissions and documents and accepted the loss to be carried forward. The Respondent relied on the judgment in Kalyanji Mavji & Co v CIT 102 ITR 287 (S.C) to support the reopening of the case. However, it was argued that this judgment did not apply as there was a change of opinion, not inadvertence or oversight. The Respondent contended that the losses claimed were not allowable under the Act, and the reopening proceedings were initiated within the ambit of the law. The Court held that there was no new tangible material to conclude that income had escaped assessment, and the reassessment was based on a change of opinion, which is impermissible.

Conclusion:
In conclusion, the Court quashed and set aside the notice dated 30th March 2021 and the order dated 14th February 2022 for Assessment Year 2014-15. Further action in this regard was prohibited, and the rule was made absolute with no costs awarded.