2018 (6) TMI 402 - AT - Income Tax

Tribunal invalidates assessment based on change of opinion; Revenue's appeal dismissed.

ITO, Ward 41 (2), Kolkata Versus M/s. Epkon Associates

The Tribunal upheld the decision of the Ld. CIT(A) to annul the assessment made by the A.O. under section 143(3) / 147 of the Income Tax Act, 1961. The ... Reopening of assessment - completed assessment u/s 143 - Held that:- Referring to the decision of full bench of Hon’ble Delhi High Court in the case of CIT vs Kelvinator of India Ltd. [2002 (4) TMI 37 - DELHI HIGH COURT] when the assessment is completed u/s 143(3), there is a presumption that all the issues relevant to the assessment have been considered and concluded by the A.O. by applying his mind. It was further held that even if there is any mistake committed by the A.O. while completing this assessment u/s 143(3), the same cannot be allowed to be taken as basis for reopening of the assessment as it would amount of giving premium to an authority exercising qua judicial function to taken benefit of its own wrong. Reopening of assessment by the A.O. in the assessee’s case was bad in law as the same was based on a mere change of opinion without there being any new tangible material coming to his possession. In that view of the matter, we uphold the impugned order of the Ld. CIT(A) cancelling the assessment made by the A.O. u/s 143(3) / 147 of the Act and dismiss this appeal of the revenue. Issues Involved:1. Validity of the reopening of the assessment under section 143(3) / 147 of the Income Tax Act, 1961.2. Legality of the additions made by the Assessing Officer (A.O.) on account of undisclosed sales and unexplained purchases.Detailed Analysis:Issue 1: Validity of the Reopening of the AssessmentThe primary issue in this case is the validity of the reopening of the assessment by the A.O. under sections 143(3) / 147 of the Income Tax Act, 1961. The original assessment was completed under section 143(3) on 20.12.2007, determining the total income of the assessee at Rs. 87,950/-, which was later rectified to Rs. 82,950/- under section 154. The A.O. reopened the assessment on noticing discrepancies in the sales figures, issuing a notice under section 148 on 08.10.2010. The assessee filed a return declaring the same income as originally filed.The assessee challenged the reopening, arguing that it was based on a mere change of opinion without any fresh tangible material. The Ld. CIT(A) annulled the assessment, citing various judicial precedents, including the Supreme Court's decision in CIT vs Tarajan Tea Co. (P) Ltd. and ITO vs Nawab Mir Barkat Ali Khan Bahadur, which established that reopening based on the same information available during the original assessment is not permissible.The Tribunal upheld the Ld. CIT(A)'s decision, emphasizing that the reopening was based on the same set of facts and materials available during the original assessment. The Tribunal referenced the full bench decision of the Hon’ble Delhi High Court in CIT vs Kelvinator of India Ltd., which held that reopening based on a mere change of opinion is not permissible. The Tribunal concluded that the reopening was bad in law and upheld the Ld. CIT(A)'s order annulling the assessment.Issue 2: Legality of the Additions Made by the A.O.Given the decision on the preliminary issue, the Ld. CIT(A) did not adjudicate on the merits of the additions made by the A.O. The additions included Rs. 58,25,540/- on account of undisclosed sales and Rs. 7,07,373/- on account of unexplained purchases. Since the reopening itself was held invalid, the Tribunal did not need to address these additions separately.ConclusionThe Tribunal dismissed the revenue's appeal, upholding the Ld. CIT(A)'s order that annulled the assessment made by the A.O. under section 143(3) / 147. The reopening of the assessment was deemed invalid as it was based on a mere change of opinion without any new tangible material. Consequently, the additions made by the A.O. were not adjudicated upon. The appeal of the revenue was dismissed, and the order was pronounced in the open court on 30th May 2018.