High Court upholds ITAT decision on reassessment citing lack of new material or valid grounds.

The High Court of Bombay upheld the ITAT's decision, emphasizing that the reassessment lacked new tangible material and was based on a mere change of opinion without valid grounds. The court highlighted the importance of the Assessing Officer forming an opinion during the original assessment proceedings, barring the reassessment solely on a different view.

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Issues:
1. Validity of reassessment made under section 143 read with section 147 of the Income Tax Act, 1961.
2. Whether the reassessment was based on a mere change of opinion without new tangible material.
3. Whether the Assessing Officer had formed an opinion during the original assessment proceedings.

Analysis:

Issue 1: Validity of reassessment under sections 143 and 147
The appeal challenged the order of the Income Tax Appellate Tribunal (ITAT) dated 10/2/2017 regarding the Assessment Year 2007-2008. The Revenue raised questions regarding the validity of the reassessment under sections 143 and 147 of the Income Tax Act, 1961. The appellant, engaged in the manufacturing business, had filed its return declaring nil income, which was later assessed before the ITAT.

Issue 2: Reassessment based on a mere change of opinion
The Assessing Officer issued a notice for reopening the assessment based on the claim of deduction for waiver of a loan on account of One Time Settlement (OTS) with banks and NCD holders. The appellant objected to the reopening, stating that all necessary information had been provided during the original assessment. The ITAT allowed the appeal, noting that the reassessment was done without new tangible material and was based on information already on record. The ITAT emphasized that the original assessment had considered the waiver of the loan, and no new grounds justified the reassessment.

Issue 3: Formation of opinion during original assessment
The Revenue argued that since the original assessment did not mention the deduction of the loan waiver, there was no formed opinion by the Assessing Officer, justifying the reopening. However, the court referred to precedents stating that when queries are raised during assessment and the assessee responds, the Assessing Officer forms an opinion. The court cited previous judgments, including one by a Division Bench, emphasizing that non-discussion or non-rejection of the assessee's response during the original assessment indicates the formation of an opinion. Therefore, the court concluded that no substantial question of law arose in the present appeal and dismissed it.

In conclusion, the High Court of Bombay upheld the ITAT's decision, emphasizing that the reassessment lacked new tangible material and was based on a mere change of opinion without valid grounds. The court highlighted the importance of the Assessing Officer forming an opinion during the original assessment proceedings, barring the reassessment solely on a different view.

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