2016 (8) TMI 683 - AT - Income Tax

Tribunal invalidates reassessment order based on change of opinion without new evidence.

ITO, Ward-4 (3), Baroda Versus M/s. Sanitex Chemicals Ltd. C/o. M/s. Panjon Ltd.

ITO, Ward-4 (3), Baroda Versus M/s. Sanitex Chemicals Ltd. C/o. M/s. Panjon Ltd. - TMI Issues Involved:1. Quashing of reassessment order by CIT(A).2. Validity of reopening of assessment under Section 147 of the Income Tax Act.3. Disclosure of material facts by the assessee.Detailed Analysis:1. Quashing of Reassessment Order by CIT(A):The Revenue appealed against the CIT(A)'s order, which quashed the reassessment order. The CIT(A) found that the original assessment proceedings had already addressed the issue of long-term capital gain. The assessee had disclosed all relevant facts in a note dated 24.12.2007, which was considered during the original assessment. The CIT(A) concluded that the reassessment was based on a change of opinion and not due to any failure on the part of the assessee to disclose material facts, thus rendering the reopening of the assessment invalid.2. Validity of Reopening of Assessment under Section 147 of the Income Tax Act:The Tribunal examined whether the reopening of the assessment under Section 147 was valid. It noted that the reasons recorded by the AO for reopening the assessment were based on a reappreciation of figures already disclosed by the assessee during the original assessment. The AO did not obtain any new information from external sources post-assessment. The Tribunal emphasized that for reopening an assessment after four years, it must be established that the income escaped due to the assessee's failure to disclose material facts fully and truly. The Tribunal found that the AO failed to demonstrate such failure by the assessee.3. Disclosure of Material Facts by the Assessee:The Tribunal reviewed the reasons recorded by the AO, which did not indicate any failure by the assessee to disclose material facts fully and truly. The AO had merely re-evaluated the details provided by the assessee during the original assessment. The Tribunal referred to various judicial precedents, including decisions by the Hon’ble Supreme Court and High Courts, which held that reopening of assessment based on a mere change of opinion is not permissible. The Tribunal concluded that the reassessment was invalid as it was not based on any new tangible material but was merely a reconsideration of the same facts previously examined.Conclusion:The Tribunal upheld the CIT(A)’s decision to quash the reassessment order, affirming that the reopening of the assessment was invalid as it was based on a change of opinion without any new material evidence. The appeal by the Revenue was dismissed.Order Pronounced:The order was pronounced in the Court on 14th June 2016 at Ahmedabad.