2018 (4) TMI 196 - HC - Income Tax

Reassessment based on Section 147 deemed change of opinion without new evidence. Writ Petition allowed.

M/s. Beta Wind Farms Private Limited Versus The Deputy Commissioner of Income Tax

The Court held that the reopening of the assessment under Section 147 was deemed a change of opinion without new material evidence. The original ... Reopening of assessment - assets viz., Wind Energy Generators were commissioned and put up to use only during the financial year 2012-13 - Held that:- In the absence of any material to disbelieve the Certificate issued by TANGEDCO stating that the Generators were commissioned on 29.03.2012, the present attempt to reopen the assessment is a clear change of opinion. The respondent could not have reopened the assessment when the Certificate and materials were considered by the Assessing Officer while completing the assessment and passing the order dated 13.03.2015. The petitioner produced the Commissioning Certificate issued by the Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO), there would have been no reason for reopening the assessment. Now that the petitioner had produced the Certificate from the Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) and inspite of receiving the same, reopening of the assessment cannot be sustained. The present attempt to reopen the assessment is a clear change of opinion and therefore, the impugned order dated 22.08.2017 is liable to be set aside - Decided in favour of assessee. Issues Involved:1. Legality of reopening the assessment under Section 147.2. Allegation of change of opinion by the Assessing Officer.3. Compliance with principles of natural justice.4. Validity of the Commissioning Certificate issued by TANGEDCO.Detailed Analysis:1. Legality of Reopening the Assessment under Section 147:The petitioner challenged the reopening of the assessment for the year 2012-13, arguing that it was based on a mere change of opinion and not on any new material evidence. The petitioner had initially filed their income tax return for the year 2012-13, which was scrutinized, and an assessment order was passed. The reopening was prompted by a Revenue Audit objection, which claimed improper depreciation as the Windmills were allegedly not commissioned in the relevant year. The respondent contended that the reopening was justified as the original assessment did not discuss the depreciation on Windmills, and the reopening was necessary to rectify the wrong allowance of depreciation.2. Allegation of Change of Opinion by the Assessing Officer:The petitioner argued that the reopening was merely a change of opinion since all relevant details, including the Commissioning Certificate from TANGEDCO, were provided during the original assessment. The petitioner relied on the judgment in *Director of Income Tax (International Taxation) & Ors. Vs. Rolls Royce Industrial Power India Ltd., & Ors.*, which held that reopening based on the same material without new evidence constitutes a change of opinion and is not permissible. The respondent, however, maintained that no opinion regarding the eligibility for depreciation was formed during the original assessment and that the reopening was based on new verification of the Bills and Commissioning Certificate.3. Compliance with Principles of Natural Justice:The petitioner claimed that the respondent ignored the principles of natural justice by not considering the documents submitted during the scrutiny assessment and by failing to provide a valid reason for reopening the assessment. The respondent countered that the reopening was not done with mala fide intention but to correct the wrong allowance of depreciation. The Court noted that the principles of natural justice were not violated as the reopening was to ensure the correct application of the Income Tax Act provisions.4. Validity of the Commissioning Certificate issued by TANGEDCO:The petitioner provided the Commissioning Certificate from TANGEDCO, stating that the Windmills were commissioned on 29.03.2012. The respondent argued that the Bill dated 12.04.2012 contradicted the commissioning date, suggesting the Windmills were not commissioned before 31.03.2012. The Court found that the respondent had no material to disbelieve the TANGEDCO Certificate, and the reopening was based on a change of opinion rather than new evidence.Conclusion:The Court concluded that the reopening of the assessment was a clear change of opinion and not based on any new material evidence. The original assessment had considered all relevant documents, including the TANGEDCO Certificate. The respondent's attempt to reopen the assessment was unjustified, and the impugned order dated 22.08.2017 was set aside. The Writ Petition was allowed, and the reassessment proceedings were quashed.