2015 (2) TMI 1141 - AT - Income Tax

Tribunal overturns reassessment order; emphasizes no reopening based on change of opinion

Gampa Venkatesam Versus Income Tax Officer

The Tribunal set aside the reassessment order and CIT(A) decision, allowing the appeal in favor of the appellant. It held that the reassessment after four ... Reopening of assessment - Held that:- There is neither any discussion about the submissions made by assessee nor about the satisfaction recorded by the AO nor about the objections raised by assessee in the re-assessment proceedings on jurisdiction. In fact, Ld. CIT(A) did not even comment about the veracity of reopening of the assessment. As seen from the later part of the order, he did not even examine whether the AO made addition or disallowed expenditure. AO brought an amount of ₹ 15,77,330/- to tax as an addition under the head income from other sources, even after accepting that an amount of ₹ 1,50,300/- pertains to a firm. Without even understanding whether the amount was an addition to the income returned or disallowance of the expenditure claimed, the Ld. CIT(A) confirms the 'disallowance' made by the AO. This shows not only the non-application of mind by the CIT(A), but also total ignorance of facts and law on the matter under consideration. In our opinion it is the CIT(A) who took hyper technical view and not assessee. The re-assessment order of AO and impugned order of CIT(A) are set aside - Decided in favour of assessee Issues:Reopening of assessment after four years under section 143(3) of the Income Tax Act.Analysis:1. The appellant, an individual, originally admitted an income of Rs. 5,62,047. During scrutiny assessment, the Assessing Officer (AO) inquired about deposits in the bank account and the appellant explained that the account was opened by a friend due to issues with the appellant's own account. The AO, after due enquiry, accepted the explanation and completed the assessment under section 143(3).2. However, four years later, the AO reopened the assessment based on the same information and disregarded the explanation provided earlier. The AO added an amount of Rs. 15,77,300 as 'income from other sources' in the reassessment. The appellant challenged the reopening and the addition, arguing that it was on mere presumptions and a change of opinion. The CIT(A) dismissed the appeal without considering the appellant's submissions.3. The appellant contended that there was no failure in disclosure of material facts, and the assessment was reopened on a mere change of opinion. The appellant cited various case laws to support the argument.4. The Tribunal analyzed the evidence and contentions. It noted that the original AO had already examined and accepted the explanation regarding the bank account deposits. The Tribunal held that the subsequent reopening after four years was not justified and amounted to a change of opinion. Citing precedents, the Tribunal emphasized that reassessment should not be based on a change of opinion.5. Referring to the law, the Tribunal highlighted that unless the assessee failed to disclose material facts necessary for assessment, reopening after four years is not valid. The Tribunal also criticized the CIT(A) for not properly considering the appellant's submissions and for upholding the addition without proper analysis.6. Ultimately, the Tribunal allowed the appellant's grounds, setting aside the reassessment order and the CIT(A) order. The appeal was allowed in favor of the appellant, emphasizing the lack of justification for the reassessment and the failure to consider the appellant's contentions adequately.