2014 (4) TMI 25 - AT - Income Tax

Tribunal rules against Revenue's appeal on reassessment beyond time limits & change of opinion

The Tribunal dismissed the Revenue's appeal against the Commissioner of Income Tax(A)'s decision, holding that reopening assessments beyond the limitation ... Validity of reopening of assessment u/s 147 of the Act - Whether the CIT(A) has erred in holding the reopening of assessment as bad in law – Held that:- The reopening of assessment u/s 147 and 148 of the Act is not permissible beyond four years of limitation as per provisions of the Act – Held that:- The CIT(A) was of the view that the reopening of completed assessment on the issue of testing and coordination charges and third party inspection charges and accreditation charges was only on change of opinion on these issues by the subsequent AO because these issues were already examined and looked into by the AO who completed the original assessment u/s 143(3) of the Act - these two issues were already examined and looked into by the A.O. who completed the original assessment order u/s. 143(3) of the Act. The belief formed by subsequent AO on these two issues was nothing but mere change of opinion – Relying upon Commissioner of Income Tax, Delhi Versus M/s. Kelvinator of India Limited [2010 (1) TMI 11 - SUPREME COURT OF INDIA] - the reopening on the basis of change of opinion is not permissible under the Act and Law - the notice of reassessment u/s 148 of the Act issued on 28.03.2008 was issued after the four year limitation time as stipulated in section 149(1)(a) of the Act - notice of reopening of assessment u/s 148 of the Act was also not sustainable and without jurisdiction – thus, the order of the CIT(A) upheld – Decided against Revenue. Issues:Reopening of assessment beyond the limitation period under sections 147 and 148 of the Income Tax Act, 1961; Permissibility of reopening based on change of opinion; Validity of reassessment order; Jurisdiction of the Assessing Officer.Analysis:The appeal was filed by the Revenue against the order of the Commissioner of Income Tax(A)-21, Mumbai, challenging the reopening of assessment for the assessment year 2002-03 beyond the limitation period. The original assessment under section 143(3) was completed on 15.3.2005, and the reassessment notice was issued on 28.3.2008, exceeding the four-year limitation period as per section 149(1)(a) of the Act. The Assessing Officer made disallowances and additions during the reassessment proceedings, leading to the appeal by the assessee before the Commissioner of Income Tax(A). The Commissioner held that the reopening of assessment and the reassessment order based on such reopening were bad in law as they amounted to a change of opinion, which is impermissible under the Act. The Commissioner set aside the order of reopening without delving into the merits of the case.During the proceedings, the Appellant argued that the reassessment notice was issued after the expiration of the four-year limitation period, which the Department accepted. The Tribunal held that the reopening of assessment under sections 147 and 148 beyond the limitation period was not permissible as per the Act. The Commissioner had correctly applied the decision of the Supreme Court in the case of Kelvinator of India Ltd., emphasizing that reopening based on a change of opinion is not allowed under the law. The issues of testing and coordination charges, and third-party inspection charges, were already examined during the original assessment proceedings, and the reassessment on the same grounds was deemed a change of opinion. The Tribunal concurred with the Commissioner's decision, dismissing the Revenue's appeal as devoid of merits.In conclusion, the Tribunal upheld the Commissioner's decision, emphasizing the impermissibility of reopening assessments beyond the limitation period and based on a change of opinion. The reassessment order was deemed invalid as it did not comply with the provisions of the Act, and the notice of reassessment issued after the limitation period was considered unsustainable and without jurisdiction. The Tribunal found no reason to interfere with the Commissioner's findings, ultimately dismissing the Revenue's appeal.Judgment:The appeal of the Revenue against the order of the Commissioner of Income Tax(A) was dismissed, affirming the decision that the reopening of assessment beyond the limitation period and based on a change of opinion was impermissible under the law.