Tribunal quashes assessment orders, citing lack of justification for reopening assessment under Section 147.

The Tribunal upheld the CIT(A)'s decision, quashing the notice under Section 148 and subsequent assessment orders for two assessment years. The Tribunal found that the Assessing Officer lacked justification to reopen the assessment under Section 147 after four years, as there was no failure by the assessee to disclose all material facts. The Tribunal concluded that the reassessment was based on a change of opinion, not permissible under the law. The revenue's appeals were dismissed, affirming the original assessment orders.

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Issues Involved:
1. Legality of reopening the assessment under Section 147 of the Income Tax Act.
2. Justification of reopening the assessment after the expiry of four years.
3. Failure of the assessee to disclose fully and truly all material facts necessary for the assessment.
4. Whether the reopening of assessment was based on a change of opinion.

Detailed Analysis:

1. Legality of Reopening the Assessment under Section 147 of the Income Tax Act:
The revenue filed an appeal challenging the order of CIT(A) which held that the Assessing Officer was not justified in reopening the assessment under Section 147 of the Income Tax Act. The appeals pertained to the same assessee for different assessment years. The assessment proceedings for A.Y. 2002-03 and A.Y. 2003-04 were reopened under Section 147 and concluded with orders passed on 31.12.2007. However, based on objections raised by the Audit party, the proceedings under Section 147 were again initiated, and notice under Section 148 was issued on 26.03.2009. The CIT(A) decided that the reopening was not justified as the Assessing Officer did not have sufficient reason to believe that income chargeable to tax had escaped assessment.

2. Justification of Reopening the Assessment After the Expiry of Four Years:
The revenue contended that the reopening of the assessment after the expiry of four years was justified under Section 149(b) of the Income Tax Act. However, the Tribunal noted that the notice under Section 148 was issued on 26.03.2009, which was beyond the period of four years from the end of the relevant assessment years. According to the first proviso to Section 147, no action can be taken after the expiry of four years unless the income chargeable to tax has escaped assessment due to the failure of the assessee to disclose fully and truly all material facts necessary for the assessment. The Tribunal found that there was no failure on the part of the assessee to disclose material facts necessary for the assessment.

3. Failure of the Assessee to Disclose Fully and Truly All Material Facts Necessary for the Assessment:
The Tribunal analyzed the reasons recorded by the Assessing Officer for reopening the assessment and found that the reasons were silent regarding any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. The Tribunal noted that all material facts, such as unrealized convertible foreign exchange and non-inclusion of processing charges in the total turnover, were duly disclosed by the assessee in the computation of deduction under Section 10B and in Form No.56G filed with the original return of income. The details were available on record at the time of passing the original assessment order and the reassessment order.

4. Whether the Reopening of Assessment was Based on a Change of Opinion:
The Tribunal observed that the reasons recorded for reopening the assessment were based on the same material facts that were available during the original assessment. There was no new information or material that came to the notice of the Assessing Officer subsequent to the passing of the original assessment order. The Tribunal concluded that the reopening of the assessment was based on a change of opinion, which is not permissible under the law.

Conclusion:
The Tribunal upheld the order of the CIT(A) quashing the notice issued under Section 148 and the subsequent assessment orders for both assessment years. The Tribunal held that the Assessing Officer was not justified in reopening the assessment under Section 147 after the expiry of four years as there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. The appeals filed by the revenue were dismissed.

Pronouncement:
The judgment was pronounced in the open Court on 30.04.2014.

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