INCOME TAX ACT, 1961

Section 147

Reassessment - Validity - Change of opinion -

Assessee's assessment was reopened under section 147 holding that there was escapement of income on short recording of closing stock by reconciliation of Trading account and details of sales submitted during the course of regular assessment.Held: Revenue failed to dispute that AO had issued notice under section 148, i.e., well beyond the specified period of four years from the end of the relevant assessment year of filing of the return without even indicating as to whether the assessee had not disclosed the corresponding shortfall pertaining to its turnover; 'fully and truly', as per first proviso to section 147. Therefore, the impugned reassessment was a mere change of opinion as per decision in CIT v. Kelvinator of India Limited (2010) 187 taxman 312 (SC) : 2010 TaxPub(DT) 1335 (SC), In case of Hindustan Lever Ltd. v. ACIT (2004) 268 ITR 332 (Bom) : 2004 TaxPub(DT) 1424 (Bom-HC) it was held that the reasons recorded by the AO must state that there was failure on the part of the assessee to disclose fully and truly all material facts. In view of all these facts and circumstances CIT(A) had rightly accepted the assessee's legal arguments challenging validity of the impugned reassessment.