Reassessment Order Canceled: ITAT Rules Change of Opinion u/s 147 Legally Flawed.

The ITAT ruled in favor of the assessee, concluding that the reopening of the assessment under Section 147 of the I.T. Act was legally flawed. The reassessment order was canceled as it constituted a change of opinion based on previously known facts. The appeal was allowed, rendering other grounds moot.

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Issues:
Challenge to reopening of assessment u/s.147 of the Act.

Analysis:
The appeal was filed by the assessee against the order of CIT(A)-1, Bhubaneswar, challenging the reopening of assessment made by the Assessing Officer u/s.147 of the Act for the assessment year 2007-08. The Assessing Officer observed that the assessee received a loan/advance of Rs. 20,00,000 from a company in which the assessee held shares. The loan was considered deemed dividend u/s.2(22)(e) of the I.T. Act, leading to the reopening of the assessment. The assessee argued that the reopening was based on the same facts known to the Assessing Officer earlier and amounted to a change of opinion, citing legal precedents to support the argument.

The assessee contended that the Assessing Officer's failure to apply legal provisions could not be attributed to the assessee. Full and true disclosure of material facts was made, and any lapse in applying relevant sections was on the part of the assessing officer. The Hon’ble Delhi High Court's decision in a similar case was cited to support the argument that the error in applying a provision could have been corrected through revision but not through reassessment under Section 147 of the Act due to the limitation period.

The Departmental Representative (D.R.) conceded to the submissions made by the assessee. Considering the facts and circumstances, the Accountant Member held that the reopening of assessment by the Assessing Officer was bad in law. Consequently, the reassessment order was canceled, and the grounds of appeal of the assessee were allowed. Since the reassessment order was canceled, the other grounds of appeal of the assessee on the merits of addition were deemed infructuous and dismissed. Finally, the appeal filed by the assessee was allowed, and the order was pronounced in the open court on 05/01/2017 in the presence of the parties.

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