2021 (4) TMI 406 - HC - Income Tax

Court quashes re-assessment due to time limit breach & lack of exceptional circumstances

K.P.S. Enterprises a partnership firm Versus Income Tax Officer, Non Corporate Ward 2 (3), Madurai

The court found that the notices issued under Section 147 of the Income Tax Act were beyond the permissible time limit and lacked exceptional ... Reopening of assessment u/s 147 - change of opinion - HELD THAT:- It is not the case of the respondent that there was any suppression on the part of the assessee. The assessee had chosen to make full disclosure and make a certain claim on that basis. The petitioner's claim was accepted by the then Assessing Officer. The subsequent officer has chosen to take a different view. Change of opinion on the part of the subsequent assessing officer cannot be a ground to reopen a concluded assessment. See M/S. KELVINATOR OF INDIA LIMITED [2010 (1) TMI 11 - SUPREME COURT] - Decided in favour of assessee. Issues:Jurisdiction of authority to issue notices under Section 147 of the Income Tax Act, 1961 for re-assessment.Analysis:The case involves a partnership firm assessed by the respondent for the assessment years 2007-08 and 2008-09. The petitioner challenged the jurisdiction of the authority to issue notices under Section 147 of the Income Tax Act, 1961, after the assessment orders were passed and taxes were paid. The respondent justified their jurisdiction under Section 147, arguing that the writ petitions were filed directly before the High Court without exhausting the appeal remedy.Upon careful consideration, the court observed that the notices under Section 147 were issued after the expiry of four years from the end of the relevant assessment years. The court emphasized that for action under Section 147 after this period, exceptional circumstances must be shown by the respondent. The exceptional categories were outlined, and it was noted that the reasons provided for re-opening the assessment did not fall under these categories.The petitioner cited a previous decision highlighting that for the authority to exercise power under Section 147 after four years from the assessment year, there must be a failure on the part of the assessee to fully and truly disclose material facts necessary for assessment. The court reiterated the importance of full disclosure by the assessee and clarified that any lack of comprehension by the assessing officer cannot justify reopening the assessment after the four-year period.The court further emphasized that the respondent did not allege any suppression by the assessee, and the change of opinion by a subsequent assessing officer cannot be a valid ground to reopen a concluded assessment. Relying on legal precedents, the court concluded that the re-assessment orders were passed without jurisdiction and subsequently quashed them. The writ petitions were allowed with no costs, and connected miscellaneous petitions were closed.