2023 (8) TMI 571 - HC - Income Tax

Reopening of assessment u/s 147 - change of opinion - reassessment opened after four years - HELD THAT - This Court must ask the question whether the allegation that there is failure to disclose material fact fully and truly should be stated in the exact words that are found in the statute, and then the answer is obvious. In law it is not mere repetition of the requirement in the exact words but a disclosure of the requirement as would be justified in the facts and circumstances of the case. It is obvious that the respondent alleges that the material facts are detected in scrutiny and survey proceedings under the relevant provisions of the I.T.Act. This Court must opine that the opening statement as extracted would satisfy the requirement of an allegation, and hence the petitioner cannot succeed on the ground that there is no allegation. As such, the petitioner is not granted any indulgence on the first ground. Reasons to believe - It is seen from the records, as enclosed to this writ petition, that the petitioner s transaction for the subject land with M/s. SSS Realty and Co. is declared in the returns filed and it would be useful to refer to the different notes where there is a reference not just to the Revaluation Reserve as mentioned consequent to the transaction, but the transaction itself. If the AO has repeatedly asked pointed questions and clarifications about the transaction in the light of the declarations made in the Returns, but without additions while framing assessment u/s 143(3) there must be a presumption that the Assessing Officer has applied his/her mind and has framed an opinion. In this regard, a useful reference could be made to the decision of Kelvinator of India Ltd. 2002 (4) TMI 37 - DELHI HIGH COURT wherein it is exposited that in terms of Clause (e) of Section 114 of the Indian Evidence Act 1872, the judicial and official acts have been regularly performed. If repeated and detailed queries are asked after the issuance of notice under Section 143(2) of the I.T.Act but without any addition, or disallowance, there is a deemed opinion and reassessment is proposed despite such opinion. It would be a case of change in opinion , and in that event reassessment would be impermissible. In the fact and circumstances of this case, this Court must opine that the respondent s reasons to say that there is no change in the opinion because the details were not available until there was a scrutiny and survey proceedings, cannot be accepted and the proposed reassessment is based on clear change in opinion. Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of notice under Section 148 of the Income Tax Act, 1961 for the assessment year 2013-2014.
2. Justification for reopening assessment based on reasons furnished by the respondent.
3. Allegations of failure to disclose material facts truly and fully.
4. Assertion of change in opinion for reassessment.
5. Adequacy of disclosures made by the petitioner during scrutiny and survey proceedings.
6. Assessment order under Section 143(3) of the Income Tax Act without additions for specific transactions.
7. Application of deemed opinion by the Assessing Officer in the absence of additions despite detailed queries.

Detailed Analysis:

Issue 1: Validity of Notice under Section 148
The petitioner challenged the notice issued under Section 148 for the assessment year 2013-2014 and the order disposing of objections to the reasons for reopening assessment. The reasons offered for reopening included detection of suppression of taxable book profits, findings from preceding years, and failures of the Assessing Officer to examine crucial aspects of taxation.

Issue 2: Justification for Reopening Assessment
The reasons for reopening assessment included discrepancies detected during scrutiny and survey proceedings, specifically related to the transfer of rights in immovable land not fully disclosed by the petitioner. The respondent cited failure to examine crucial aspects of taxation and the applicability of MAT provisions as grounds for reopening.

Issue 3: Allegations of Failure to Disclose Material Facts
The petitioner contended that there was no deliberate failure to disclose material facts and objected to the reassessment being based on a "change in opinion." The petitioner argued that specific allegations of deliberate failure to disclose material facts were necessary for reopening assessment.

Issue 4: Assertion of Change in Opinion
The petitioner argued that the reassessment was a result of a change in opinion by the Assessing Officer, citing detailed disclosures made during scrutiny and survey proceedings. The petitioner relied on previous court decisions to support the contention that reassessment based on a change in opinion was impermissible.

Issue 5: Adequacy of Disclosures
The petitioner had made detailed disclosures during scrutiny and survey proceedings regarding the transaction with M/s. SSS Realty and Co. The petitioner provided documents and explanations in response to notices, demonstrating transparency in reporting the relevant transactions.

Issue 6: Assessment Order without Additions
The Assessing Officer had framed the assessment order without making additions for the specific transactions in question, despite detailed queries and disclosures made by the petitioner. This raised the question of whether there was a deemed opinion by the Assessing Officer regarding the transactions.

Issue 7: Application of Deemed Opinion
Repeated and detailed queries by the Assessing Officer without any additions during assessment implied a deemed opinion. The court considered this as a case of change in opinion and deemed the proposed reassessment impermissible based on the clear change in opinion evident from the assessment process.

In conclusion, the court allowed the petition, quashing the notice and the order for reopening assessment, emphasizing the importance of specific allegations of failure to disclose material facts and the impermissibility of reassessment based on a change in opinion.