2024 (10) TMI 96 - HC - Income Tax

Reopening of assessment u/s 147 - change of opinion - assessee had not paid service tax - HELD THAT - It appears that the reassessment sought to be initiated mainly on the basis that it has been found that the assessee had not paid service tax during the year and the same was shown in the balance-sheet as tax and duties payable. A further scrutiny of the reasons so recorded would also reveal that the said reasons appears to have been recorded on verification of the case records, more particularly with regard to service tax issue. Meaning thereby, the authorities have revisited the case records already available with them. Thus, we are of the opinion that as such the authority has not come in the possession of any new information and/or any other tangible material. A bare perusal of the entire reasons recorded would suggest that initiation of reopening is sought on the basis of re- verification of material already on record. We also satisfied ourselves by taking into consideration the relevant documentary evidence pointed out by advocate for the petitioner that each and every query including the issue of service tax raised in the original assessment proceedings were satisfied and all the relevant materials and information were disclosed truly and fully. The authority has already gone into the aspect of issue of service tax at the time of assessment proceedings and passing the order u/s 143(3) of the Act. Thus, in our considered opinion, jurisdiction assumed by the AO u/s 147 of the Act is nothing but a change of opinion. It is trite law that assumption of jurisdiction u/s 147 of the Act is impermissible on the basis of mere change of opinion.

Summary

Issues:
Challenging notice under Section 148 of the Income Tax Act and rejection of objections raised by the petitioner.

Analysis:
The petitioner challenged a notice dated 27th March, 2021, under Section 148 of the Income Tax Act, 1961, as well as an order dated 11th December, 2021, which rejected the objections raised by the petitioner. The petitioner filed a return of income on 26th September, 2013, declaring income at Rs.12,09,758/- for the A.Y. 2013-14. The department processed the return, and a scrutiny assessment order under Section 143(3) of the Act was framed on 27th March, 2015. The petitioner received several notices and filed replies accordingly. The petitioner submitted details of service tax challan under VCES Scheme on 23rd June, 2014. An assessment order under Section 143(3) of the Act was passed on 31st December, 2015. Subsequently, the petitioner received a notice under Section 148 of the Act on 27th March, 2021, which led to the petitioner filing objections against the reasons for reopening, objections that were later rejected by the respondent on 11th December, 2021.

The petitioner contended that there was no fault on their part and reopening the scrutiny assessment under Section 143(3) was impermissible. The petitioner argued that the reopening was a mere change of opinion as specific queries regarding service tax payment were addressed during the original scrutiny proceedings. The petitioner also challenged the sanction under Section 151, claiming it was granted mechanically without proper reasoning. On the other hand, the respondent argued that the petitioner had not fully disclosed facts necessary for assessment and had underpaid service tax, justifying the reassessment. The respondent maintained that the sanction under Section 151 was valid and proper.

Upon reviewing the submissions and materials, the Court considered whether the reassessment was a change of opinion. The reasons recorded for reopening highlighted the non-payment of service tax by the petitioner, which was already known from the case records. The Court found that no new information or tangible material prompted the reassessment, indicating a mere re-verification of existing records. It was noted that all queries, including service tax issues, were addressed during the original assessment proceedings. Consequently, the Court concluded that the reassessment was indeed a change of opinion, which is impermissible under the law. As a result, the petition was allowed, and the notice under Section 148 of the Income Tax Act, 1961, along with the order rejecting the petitioner's objections, were quashed.