Reopening assessment under section 147 invalid when based on change of opinion rather than fresh evidence

The Bombay HC held that reopening of assessment under section 147 was invalid as it was based on change of opinion rather than valid reasons to believe. The petitioner successfully demonstrated that all four contested items - provision against unascertained liabilities, excessive deduction under section 35(2AB), CSR expenses and donations deduction, and excess section 80IC allowance - were subject matter of discussion during original assessment proceedings through notices under section 142(1) and subsequent replies. The court ruled that once queries are raised and replied to during assessment, they become subject of AO's consideration regardless of specific mention in assessment order, making reopening impermissible.

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Issues Involved:

1. Claim of provisions against unascertained liabilities.
2. Claim of excessive deduction under Section 35(2AB) of the Act.
3. Deduction claimed on account of CSR expenses and donations.
4. Excess allowance of deduction under Section 80IC of the Act.

Summary:

1. Claim of Provisions Against Unascertained Liabilities:
The Petitioner claimed year-end provisions for advertising and publicity expenses amounting to Rs. 89,17,26,682/-. The Revenue contended that these were against unascertained liabilities and hence not allowable. The court noted that this issue was discussed during the original assessment proceedings and, therefore, reopening on this ground was not justified as it would amount to a change of opinion.

2. Claim of Excessive Deduction Under Section 35(2AB) of the Act:
The Petitioner claimed a deduction of Rs. 6,38,97,55,364/- under Section 35(2AB) for scientific research, whereas the allowable amount was Rs. 5,45,47,95,980/-, resulting in an excess claim of Rs. 93,49,59,384/-. The court found that this issue was also raised and responded to during the original assessment proceedings. The reopening of assessment on this ground was deemed a change of opinion, which is not permissible.

3. Deduction Claimed on Account of CSR Expenses and Donations:
The Petitioner added back Rs. 86,72,16,104/- for CSR expenses in the P&L account but claimed Rs. 48,56,48,000/- under Section 80G, resulting in a double deduction. The court observed that this matter was part of the original assessment discussions and reopening on this basis was not justified.

4. Excess Allowance of Deduction Under Section 80IC of the Act:
The Revenue argued that there was a short apportionment of expenses leading to an excess deduction of Rs. 5,15,01,705/- under Section 80IC. The court noted that this issue was considered during the original assessment proceedings. Therefore, reopening on this ground was also seen as a change of opinion.

Conclusion:
The court held that all four issues raised for reopening the assessment were already considered during the original assessment proceedings. The reopening of assessment based on these issues was deemed a change of opinion, which is not permissible. The petition was allowed, and the notice for reopening the assessment was quashed. The court emphasized that an AO cannot remedy errors resulting from their own oversight through reassessment.

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