INCOME TAX ACT, 1961

Section 147

Reassessment - Validity - No new material came to knowledge of AO - Change of opinion

AO reopened assessment under section 147. However, CIT(A) held that the AO had no 'new information' to form the reason to believe that income of the assessee escaped assessment and it was mere change of opinion, therefore the reassessment was unsustainable. Aggrieved, Revenue filed an appeal. It was submitted on behalf of the revenue that the assessment under section 147 was done on the ground of audit objection by the revenue audit party and therefore, it would not amount to 'change of opinion', rather it would amount to fresh information brought to the knowledge of the AO. Held: It was found that the assessment was reopened on account of suppression of purchases and from perusal of reasons recorded, it was nowhere mentioned that the assessment was reopened on the basis of audit objection. Further, VAT returns and details of purchases were available before the AO at the time of original assessment proceedings under section 143(3) and no new material came to the knowledge of the AO to take recourse of reassessment proceedings. Thus, it was merely a change of opinion. Even otherwise, the tax effect involved in instant appeal was below the prescribed limit fixed by the CBDT and therefore, the Revenue should not have filed appeal on such count. Accordingly, the proceedings under section 147 were null and void and hence, the same would not be sustainable.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2009-10

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