2022 (2) TMI 223 - AT - Income Tax

Revenue's Appeal Dismissed: Reopening of Assessment Quashed, No Fresh Material

Income Tax Officer, Ward-2 Perambalur. Versus Shri S.B. Raja

The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to quash the reopening of the assessment and the additions made under Section ... Reopening of assessment u/s 147 - Eligibility of reason to believe - change of opinion - assessee challenged the reopening of the assessment on the ground that the AO has reopened the assessment on mere change of opinion without any fresh tangible material, which is evident from the fact that in the Proceedings the AO examined the cash deposits into the bank account - HELD THAT:- We are of the opinion that the assessee has already disclosed all the information before the AO in the original proceedings itself and the entire information is already available in the assessment record and also this fact is already confirmed in the remand report. There is no fresh tangible material with the AO to form reasonable basis of escapement of income which is evident from the fact that the AO is in the reasons referred to return of income. Hence, it is clear that there is no fresh material available with the AO to re-open the assessment. Therefore, we are of the view that it is only change of opinion on the existing information. Accordingly, re-opening has to be quashed. The Ld. CIT(A) after considering relevant facts has rightly quashed the reopening of assessment. Hence, we are inclined to uphold order of the Ld. CIT(A) and dismiss revenue appeal. Issues Involved:1. Legality of reopening the assessment under Section 147 of the Income Tax Act, 1961.2. Justification for additions made under Section 69 of the Income Tax Act, 1961 for unexplained cash deposits.Detailed Analysis:Issue 1: Legality of Reopening the Assessment under Section 147 of the Income Tax Act, 1961The Revenue challenged the order of the Commissioner of Income Tax (Appeals)-1, Trichy, which quashed the reopening of the assessment for the assessment year 2010-11. The Revenue argued that the reopening was within four years from the end of the assessment year and that there was no requirement for the assessee to disclose fully and truly all material facts as per the first proviso to Section 147 of the Act. The Revenue also contended that the Assessing Officer (AO) did not form an opinion on the material in the original assessment order, thus there was no change of opinion.The assessee, a civil contractor, had filed a return estimating income at 8% of the total turnover under Section 44AD. The original assessment was completed on 31.10.2012, accepting the returned income. However, it was later found that the total turnover exceeded Rs. 40 lakhs, requiring the maintenance of audited books of accounts. Additionally, unexplained credit transactions amounting to Rs. 12,44,293/- were found in the assessee's bank account. Consequently, a notice under Section 148 was issued on 27.10.2014.The AO made additions under Section 69 for unexplained investments towards cash deposits in the Savings Bank (SB) account. The assessee appealed, arguing that the AO had reopened the assessment based on a change of opinion without any fresh tangible material. The Commissioner of Income Tax (Appeals) agreed with the assessee, noting that all primary facts were disclosed during the original assessment and that the reassessment proceedings were essentially a review and change of opinion, which is untenable.The Tribunal upheld the CIT(A)'s decision, stating that the AO did not have any fresh tangible material to justify the reopening. The Tribunal referenced several case laws, including ITO vs. Sanjeev Ghei, PCIT vs. Century Textiles & Industries Ltd., and ITO vs. TechSpan India (P) Ltd., which supported the view that reopening based on a change of opinion is not permissible.Issue 2: Justification for Additions Made under Section 69 of the Income Tax Act, 1961 for Unexplained Cash DepositsThe AO made additions of Rs. 3,87,197/- and Rs. 6,00,000/- under Section 69 for unexplained cash deposits. The assessee argued that these amounts were either refunds or loans from his wife, who had sufficient income from her business activities. The CIT(A) found that the assessee had provided sufficient explanations and documentation for these deposits. The Tribunal agreed with the CIT(A), noting that the AO did not have any new information and that the details were already available in the assessment records.The Tribunal concluded that the reassessment proceedings were not justified and were merely a change of opinion. Therefore, the additions made by the AO were not sustainable.Conclusion:The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to quash the reopening of the assessment and the additions made under Section 69. The Tribunal emphasized that the AO did not have any fresh tangible material to justify the reopening and that the reassessment was based on a change of opinion, which is not permissible under the law. The appeal filed by the Revenue was dismissed, and the order was pronounced on 31st January 2022 at Chennai.