2012 (4) TMI 641 - HC - Income Tax

High Court emphasizes importance of considering all material in original assessment for deductions under Income Tax Act. Invalid re-assessment without new material.

CIT Versus KEANE INDIA LTD.

The High Court refrained from delving into the merits of the computation of deduction under Section 10A of the Income Tax Act, emphasizing the importance ... Reopening of assessment - Computation of deduction under Section 10A - whether it is to be done before or after taking into account the brought forward losses and depreciation? - Held that:- In this case queries and questions regarding computation of deduction under Section 10A were raised by the Assessing Officer and were answered by the assessee at the time of original assessment. Failure or mere absence of finding or averment in the assessment order is not material.We dismiss the appeal on the ground that it is a clear case of change of opinion. Issues:Computation of deduction under Section 10A of the Income Tax Act, 1961; Re-assessment proceedings under Section 147 of the Act based on change of opinion.Analysis:1. Computation of deduction under Section 10A:The High Court refrained from delving into the merits of the matter concerning the computation of deduction under Section 10A of the Income Tax Act, emphasizing the issue of whether it should be done before or after considering brought forward losses and depreciation. The Tribunal deemed the re-assessment proceedings under Section 147 of the Act invalid, labeling it as a case of change of opinion. The CIT (Appeals) highlighted the submission of documents during the original assessment and re-assessment, pointing out that the Assessing Officer had examined the computation of deduction under Section 10A during the initial assessment. Despite the absence of a specific answer on the legal issue in the original assessment order, the Court cited precedent to assert that if the Assessing Officer had all the material during the original assessment and chose not to express a finding, it should not be a basis for reopening the assessment.2. Re-assessment proceedings under Section 147 based on change of opinion:The Court dismissed the appeal on the grounds of a clear change of opinion by the Assessing Officer, emphasizing that the issue of computation of deduction under Section 10A was not under scrutiny on its merits in the appeal. The Court reiterated that the presence of all material during the original assessment, even if not explicitly addressed in the assessment order, should not justify re-assessment based on a change of opinion. The principle was established that if the Assessing Officer had the necessary information during the original assessment and later took a different view, it constituted a change of opinion, not a valid reason for re-assessment. The judgment underscored that the mere absence of a finding or averment in the assessment order should not lead to reopening the assessment if all relevant material was presented during the original assessment.In conclusion, the High Court's judgment focused on the importance of considering all relevant material during the original assessment, highlighting that a change of opinion by the Assessing Officer, without new material, should not warrant re-assessment. The Court's decision centered on the principle that the absence of a specific finding in the assessment order does not automatically necessitate re-assessment if the Assessing Officer had the opportunity to consider the relevant information during the initial assessment.