2016 (4) TMI 78 - AT - Income Tax

Tribunal dismisses Revenue's appeal, finding reassessment barred by limitation under Income Tax Act.

The Tribunal upheld the decision of the Ld CIT(A) in a case concerning the validity of reopening assessment for AY 2005-06. It was determined that the ... Reopening of assessment - limitation for reopening beyond four years - first proviso to section 147 - failure to disclose fully and truly all material facts - change of opinion - reassessment under section 148Reopening of assessment - first proviso to section 147 - failure to disclose fully and truly all material facts - change of opinion - reassessment under section 148 - Validity of reopening assessment after four years where the assessing officer had raised specific queries in original assessment and the assessee had replied - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion that the reopening of assessment by issuing notice under section 148 after the expiry of four years was barred by the first proviso to section 147. The assessing officer had raised specific queries in the original assessment proceedings by notice dated 14.12.2007 concerning the bad debts claim and the foreign exchange transaction; the assessee furnished detailed replies on 20.12.2007. On these facts, there was no omission or failure by the assessee to disclose fully and truly all material facts necessary for assessment. Because the proviso to section 147 was not shown to be satisfied, the reassessment amounted to a mere change of opinion by the assessing officer, which is impermissible; accordingly the reopening was invalid. The Tribunal further noted that the CIT(A) considered the matter in proper perspective and quashed the reassessment, rendering the consequential grounds infructuous. [Paras 4, 5, 6]Reopening held invalid; reassessment quashed and additions disallowed as reopening was barred by proviso to section 147.Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the order of the CIT(A) quashing the reassessment for AY 2005-06 on the ground that the statutory proviso to section 147 was not satisfied and the reopening amounted to an impermissible change of opinion. Issues:Challenge to the validity of reopening assessment for AY 2005-06.Analysis:The appeal pertains to the Revenue challenging the decision of the ld.CIT(A)-9 regarding the validity of the reopening of assessment for the assessment year 2005-06. The assessing officer had reopened the assessment after the expiry of four years from the end of the assessment year to disallow certain claims that were allowed in the original assessment proceedings. The assessee contended that there was no failure to furnish material information as specific queries were raised by the assessing officer during the original assessment, and the assessee duly replied to them. The first proviso to sec. 147 of the Act was invoked by the assessee to argue that the reopening of assessment was bad in law. The Ld CIT(A) agreed with the assessee's contentions and quashed the reassessment order, leading to the Revenue filing an appeal.The Tribunal noted that the original assessment was completed under sec. 143(3) of the Act, and the assessing officer had indeed raised specific queries regarding the disallowances in question during the original assessment. Since the assessee had provided replies to these queries, it was held that there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Therefore, it was concluded that the first proviso to sec. 147 of the Act was not satisfied, indicating that the reopening of assessment was based on a change of opinion, which is impermissible. The decision of the Ld CIT(A) was upheld as it correctly addressed the issue, emphasizing that the reassessment proceedings were barred by limitation under the proviso of sec. 147 of the Income Tax Act.The Ld CIT(A) highlighted that during the original assessment, the assessing officer had specifically raised the issues that were later the subject of the reassessment. The appellant had provided details and clarifications on these issues in response to the assessing officer's queries. It was emphasized that the assessing officer had applied his mind during the original assessment and had taken a conscious decision on the matters in question. As there was no omission or failure on the part of the appellant to disclose material facts, the reassessment after the lapse of four years from the end of the assessment year was deemed unjustified. The Tribunal concurred with the Ld CIT(A)'s decision to quash the reassessment proceedings, rendering the grounds relating to the additions moot.In conclusion, the Tribunal found no infirmity in the decision of the Ld CIT(A) and upheld the same, resulting in the dismissal of the appeal filed by the Revenue challenging the validity of the reopening of assessment for the assessment year 2005-06.