2024 (7) TMI 1144 - HC - Income Tax

Reopening of assessment u/s 147 - mere change of opinion - differential amount i.e. difference between the amounts reflected in the balance-sheet and income offered in the profit and loss account has escaped assessment - HELD THAT - It is apt to take note of the admitted fact that the case of the petitioner was selected for scrutiny and the then AO after having considered details furnished by the petitioner such as, export sale as well as benefit in the form of duty drawback, duty of customs or central excise repaid and repayable, cash assistance, vide order, framed the assessment under the provision of section 143 (3) meaning thereby, in our view, AO was in possession with all the relevant material including the profit and loss account as well as the balance-sheet at the time when the assessment order was framed u/s 143 (3) of the Act. Therefore, Revenue was well within their possession of all the relevant materials and thereby it is difficult to hold that the petitioner has not fully and truly disclosed the material facts. When the then AO has framed the assessment under the provisions of section 143 (3) of the Act, all the documents were furnished by the petitioner and therefore now in absence of any new and/or tangible material, keeping in mind the contents of the reasons recorded if notice u/s 148 is issued on the same material, in our considered opinion, the same is nothing but the mere change of opinion which is not permissible in eye of law. In absence of failure on the part of the petitioner to disclose fully and truly all material facts, the notice u/s 148 is issued beyond the period of four years the same is not even otherwise permissible. Assessee appeal allowed.

Issues Involved:
1. Reopening of assessment under Section 148 of the Income Tax Act, 1961.
2. Alleged failure to disclose full and true material facts.
3. Permissibility of reopening beyond the period of four years.
4. Whether the reopening constitutes a mere change of opinion.

Detailed Analysis of the Judgment:

1. Reopening of assessment under Section 148 of the Income Tax Act, 1961:

The petitioner challenged the notice dated 18.03.2020 issued under Section 148 of the Income Tax Act, 1961, seeking to reopen the assessment for the Assessment Year 2013-14. The petitioner had filed the return of income on 29.11.2013 declaring a total income of Rs. 6,38,41,415/-. The case was selected for scrutiny, and the assessment was completed under Section 143(3) on 21.03.2016 without any changes to the declared income. The reopening notice was issued based on the belief that certain income had escaped assessment.

2. Alleged failure to disclose full and true material facts:

The petitioner argued that there was no failure on their part to disclose full and true material facts necessary for the assessment. During the original assessment proceedings, all relevant details, including export sales, duty drawbacks, and interest income, were furnished to the Assessing Officer. The petitioner contended that the reopening was based on the same material already available during the original assessment, and thus, it constituted a mere change of opinion.

3. Permissibility of reopening beyond the period of four years:

The petitioner argued that the reopening of the assessment was beyond the period of four years from the end of the relevant assessment year. According to Section 147 of the Income Tax Act, reopening beyond four years is permissible only if there is a failure on the part of the assessee to disclose fully and truly all material facts. The petitioner maintained that all necessary disclosures were made during the original assessment, and therefore, the reopening beyond four years was not justified.

4. Whether the reopening constitutes a mere change of opinion:

The court examined whether the reopening of the assessment was based on a mere change of opinion. It was noted that during the original assessment under Section 143(3), all relevant details were provided by the petitioner, and the Assessing Officer had considered these details while framing the assessment order. The court observed that the reasons recorded for reopening did not indicate any new or tangible material that was not available during the original assessment. The court concluded that the reopening was based on the same set of facts and materials, and thus, it constituted a mere change of opinion, which is not permissible under the law.

Conclusion:

The court held that the reopening of the assessment was not justified as it was based on a mere change of opinion and was beyond the period of four years without any failure on the part of the petitioner to disclose fully and truly all material facts. The impugned notice dated 18.03.2020 issued under Section 148 was quashed and set aside. The petition was allowed in favor of the petitioner.

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