INCOME TAX ACT, 1961

Section 147 Section 143(3)

Reassessment - Change of opinion vis-a-vis full and true disclosure - Relevant material already available on original assessment records -

The assessment was concluded under section 143(3). Notice under section 148 was thereafter issued to assessee in response to which, assessee filed return and requested for reasons recorded to be furnished to assessee. Reasons recorded were communicated to assessee. Assessee filed various submissions in respect of the same which was disregarded by AO. AO passed order under section 143(3) read with section 147 by making the disallowances. Assessee preferred appeal before CIT(A). Assessee raised the legal issue challenging the validity of reopening under section 147, as it was after a period of 4 years from the end of the assessment year in which the original assessment order was passed. It was contested that there was no fresh evidence warranting invoking of the said provisions, and therefore, the reopening was bad in law. However, CIT(A) rejected the legal ground raised by assessee. On merits, the CIT(A) confirmed the additions made by AO. Assessee submitted that the reopening beyond period of 4 years without there being a satisfaction recorded by the AO regarding failure on behalf of assessee to truly and fully disclose all material facts, was bad in law. Held: Primarily, it was observed by the Tribunal that CIT(A) had recorded that the basis of reopening was certainly the source of information that was already available on record. The CIT(A) further recorded that in the original assessment proceedings due to oversight and inadvertence or a mistake committed by ITO, the incumbent AO had jurisdiction to reopen the assessment. This itself makes it clear that there was no fresh materials available on record for initiating the reassessment proceedings. The reopening of concluded assessment beyond a period of 4 years have been proceeded with by the AO, based on the materials available on record. From the replies furnished by assessee during the original assessment proceedings, Tribunal noted that queries were raised by the AO on the same issue and assessee had filed submissions in respect of the issues considered for reopening the assessment. On a co-joint reading of all the materials filed by assessee before the AO in respect of alleged issues and the assessment order passed, it necessarily implies an opinion of the erstwhile AO not to consider the issues to be taxable, though silent in the original assessment order. Therefore, the subsequent issuance of notice to reopen the assessment on such issues amounts to change of opinion. Further, the reasons recorded suggests that there was no failure on behalf of assessee to fully and truly disclose all material facts necessary for assessment, which is a necessary precondition for reopening an assessment beyond a period of 4 years as stipulated under the Act. As the notice of reopening of the concluded assessment was set aside and quashed by Tribunal, consequential assessment order passed by the AO was quashed and set-aside.

Relied:Rallies India Ltd. v. ACIT & Anr. (2010) 323 ITR 54 (Bom) : 2010 TaxPub(DT) 1619 (Bom-HC), CIT v. (I) Kelvinator of India Ltd. (ii) Eicher Ltd. (2010) 320 ITR 561 (SC) : 2010 TaxPub(DT) 1335 (SC), Asian Paints Ltd. v. Dy. CIT & Anr. (2009) 223 CTR 141 (Bom-HC) : 2009 TaxPub(DT) 640 (Bom-HC), CIT v. Younus Kunju (1997) 228 ITR 147 (Ker-HC) : 1997 TaxPub(DT) 836 (Ker-HC), ACIT v. Dhirendra Hansraj Singh, S.L.P (C) No. 32237 of 2018 : 2018 TaxPub(DT) 7469 (SC), ACIT v. FIS Global Business Solutions India (P) Ltd. (2019) 262 Taxman 369 (SC) : 2019 TaxPub(DT) 2038 (SC), CIT v. Kelvinator India Ltd. (2010) 320 ITR 561 (SC) : 2010 TaxPub(DT) 1335 (SC), ITO v. Tech Span India (P) Ltd., (2018) 92 taxmann.com 361 (SC) : 2018 TaxPub(DT) 1991 (SC), Revolution Forever Marketing (P) Ltd. v. ITO (2019) 413 ITR 400 (Del) : 2019 TaxPub(DT) 3668 (Del-HC), Champ Energy Ventures (P) Ltd. v. ITO (2019) 102 taxmann.com 374 (Bom) : 2019 TaxPub(DT) 1013 (Bom-HC), Asian Paints Ltd. v. Dy. CIT & Anr. (2009) 223 CTR 141 (Bom) : 2009 TaxPub(DT) 0640 (Bom-HC), Rallies India Ltd. v. ACIT & Anr. (2010) 323 ITR 54 (Bom) : 2010 TaxPub(DT) 1619 (Bom-HC), ICICI Home Finance Company Ltd. v. ACIT (2012) 25 Taxmann.com 241 (BOM), Asiatic Oxygen Ltd. v. Dy. CIT (2015) 60 taxmann.com 265 (Calcutta) : 2014 TaxPub(DT) 3988 (Cal-HC),CIT v. Younus Kunju (1997) 228 ITR 147 (Kerala) : 1997 TaxPub(DT) 0836 (Ker-HC).. Explained/Not relied:Kalyanji Mavji & Co. v. CIT(S) (1976) 102 ITR 287 (SC) : 1976 TaxPub(DT) 609 (SC).

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