2024 (9) TMI 1280 - HC - Income Tax

Reopening of assessment u/s 147 - reasons to believe - review v/s reassess - as argued petitioner was selected for scrutiny assessment and the issue on hand was examined by the then AO in threadbare - whether the impugned notice under Section 148 of the Act can be said to be legal and justified? - Revenue Authority has sought to reopen broadly on the ground that petitioner was not entitled for claiming deduction under Section 54F and the details with regard to sale of immovable property and purchase of new property are concerned, the same was without any supporting evidence. HELD THAT - The assessee-petitioner at the time of filing the original return and thereafter in the scrutiny, has already furnished the requisite details about the transaction of sale and purchase of immovable property and the working of capital gain along with all the necessary evidence. Thus, in our view, AO forming his opinion on the material already available on record and/or the material which were already considered by the then AO, is nothing but a change of opinion. It is not the case of the AO that new information and/or any tangible material has come into possession. Thus, in our view, forming any opinion based on same facts and circumstances which were then available with the AO at the time of scrutiny is said to be change of opinion and thereby the same is not permissible. See M/S. KELVINATOR OF INDIA LIMITED 2010 (1) TMI 11 - SUPREME COURT wherein held schematic interpretation to the words reason to believe failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of mere change of opinion , which cannot be per se reason to re-open. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has no power to review; he has the power to re-assess. But re-assessment has to be based on fulfillment of certain pre-condition and if the concept of change of opinion is removed, as contended on behalf of the Department, then, in the garb of re- opening the assessment, review would take place - Decided in favour of assessee.

Summary

Issues Involved:
1. Legality of the notice under Section 148 of the Income Tax Act, 1961.
2. Whether the notice constituted a mere change of opinion.
3. The basis of reopening the assessment under Section 147 of the Income Tax Act, 1961.
4. Compliance with procedural requirements for reopening the assessment.

Detailed Analysis:

1. Legality of the Notice under Section 148 of the Income Tax Act, 1961:
The petitioner challenged the notice under Section 148 of the Income Tax Act, 1961, which sought to reopen the income-tax assessment for the A.Y. 2016-17. The petitioner argued that the notice was issued without any new tangible material and was based solely on an audit objection, thereby making it impermissible in the eyes of the law. The court examined whether the notice was legally justified and concluded that the notice was not legal as it was issued based on the same material that was already scrutinized during the original assessment.

2. Whether the Notice Constituted a Mere Change of Opinion:
The petitioner contended that the notice under Section 148 was a mere change of opinion, which is not permissible. The court noted that the petitioner's case was selected for limited scrutiny, and all necessary details were provided during the original assessment. The court found that the Assessing Officer had already examined the issues related to the sale of immovable property and the deduction under Section 54F during the original scrutiny. Therefore, reopening the assessment on the same facts and circumstances amounted to a change of opinion, which is not permissible.

3. Basis of Reopening the Assessment under Section 147 of the Income Tax Act, 1961:
The court analyzed the reasons recorded for reopening the assessment. The Revenue Authority sought to reopen the assessment on the grounds that the petitioner was not entitled to the deduction under Section 54F due to the lack of supporting evidence for the purchase of a new residential property. However, the court found that all necessary details and evidence were already furnished during the original assessment. The court emphasized that the reopening of the assessment must be based on new tangible material, which was not the case here. The court referred to the decision in Commissioner of Income-tax, Delhi v. Kelvinator of India Ltd., which stated that a mere change of opinion cannot justify reopening an assessment.

4. Compliance with Procedural Requirements for Reopening the Assessment:
The court examined whether the Assessing Officer complied with the procedural requirements for reopening the assessment under Section 147. The court found that the Assessing Officer did not possess any new information or tangible material and merely relied on the same facts and circumstances that were already considered during the original assessment. The court also noted that the necessary sanction for issuing the notice under Section 148 was sought from the Joint Commissioner, but this did not suffice to justify the reopening based on a mere change of opinion.

Conclusion:
The court concluded that the notice under Section 148 of the Income Tax Act, 1961, was not legally justified as it constituted a mere change of opinion without any new tangible material. The court allowed the petition and quashed the impugned notice dated 30th March, 2021, issued under Section 148 of the Income Tax Act, 1961.