2020 (8) TMI 595 - AT - Income Tax

Reopening assessment without new facts is impermissible under Income-tax Act

Vodafone Idea Limited (Successor to Aditya Birla Telecom Limited) Versus The Asst. Commissioner of Income Tax Aayaker Bhavan, M.K. Road, Churchgate, Mumbai

Vodafone Idea Limited (Successor to Aditya Birla Telecom Limited) Versus The Asst. Commissioner of Income Tax Aayaker Bhavan, M.K. Road, Churchgate, ... Issues Involved:1. Reopening of assessment under section 147 of the Income-tax Act, 1961.2. Validity of reasons for reopening the assessment.3. Allegation of change of opinion in reopening the assessment.4. Deduction of interest expenses under section 57(iii) of the Act.Detailed Analysis:1. Reopening of Assessment under Section 147 of the Act:The primary issue in this appeal concerns the reopening of the assessment under section 147 of the Income-tax Act, 1961. The assessee argued that the reopening was merely based on a change of opinion. The original assessment was completed under section 143(3) on 21.12.2009, and the notice under section 148 was issued on 03.09.2010, within four years from the end of the relevant assessment year. The Assessing Officer (AO) recorded reasons for the issuance of the notice under section 148, citing that the interest paid on loans used for purchasing shares, a capital asset, should not have been claimed as revenue expenditure.2. Validity of Reasons for Reopening the Assessment:The AO justified the reopening by stating that the interest paid on loans for purchasing shares of Idea Cellular Limited, a capital asset, should not have been deducted from the interest income received. The CIT(A) upheld the AO's action, stating that the AO had material facts to believe that income had escaped assessment. The CIT(A) relied on several Supreme Court decisions, emphasizing that the AO has wide powers to reopen assessments if there is reason to believe that income chargeable to tax has escaped assessment.3. Allegation of Change of Opinion:The assessee contended that the reopening of the assessment was based on a change of opinion, as all necessary facts were disclosed during the original assessment proceedings. The Tribunal noted that the AO had considered the interest expenses during the original assessment and allowed the deduction under section 57 of the Act. The Tribunal referred to the Supreme Court decision in CIT vs. Kelvinator of India Ltd., which held that reassessment based on a mere change of opinion is not permissible. The Tribunal also cited other High Court decisions supporting the view that reassessment cannot be initiated on the same set of facts without new material or information.4. Deduction of Interest Expenses under Section 57(iii) of the Act:The assessee provided detailed disclosures regarding the interest expenses and the corresponding interest income in its financial statements and during the original assessment proceedings. The Tribunal noted that the AO had considered these details and allowed the deduction in the original assessment. The Tribunal concluded that the AO's action to reopen the assessment on the same issue amounted to a change of opinion, which is not permissible under the law.Conclusion:The Tribunal quashed the reopening of the assessment, holding that it was based on a change of opinion. The Tribunal allowed the appeal of the assessee, emphasizing that reassessment proceedings cannot be initiated on the same set of facts without new material or information.Order:The appeal of the assessee is allowed. The reopening of the assessment under section 147 is quashed. The other grounds raised by the assessee on merits were not addressed as the jurisdictional issue was decided in favor of the assessee. The order was pronounced in the open court on 11.08.2020.