2006 (6) TMI 163 - AT - Income Tax

Tribunal rules against tax reassessment based on same facts, emphasizing limitations on Assessing Officer's power

The Tribunal upheld the CIT(A)'s decision to quash reassessment proceedings, ruling that the second notice under section 148 of the IT Act, 1961, was ... Change Of Opinion Issues:1. Validity of notice under section 148 of the IT Act, 1961.2. Legality of assessment order passed under section 143(3)/148.Analysis:1. The appeal in question pertains to the validity of a notice issued under section 148 of the IT Act, 1961, for the assessment year 1994-95. The primary contention was whether the notice dated 29th May, 2001, for reassessment was justified or illegal. The CIT(A) had quashed the assessment order dated 28th March, 2003, on the grounds that the second notice was unwarranted as there was no new information necessitating its issuance. The AO had previously completed an assessment based on information received from ITO (CIB), Jaipur, and subsequently issued a fresh notice based on information from Central Circle-I, Jaipur. The CIT(A) held that this amounted to a mere change of opinion by the AO, which is impermissible under the law.2. Upon thorough examination of the facts and legal precedents, the Tribunal found that the second assessment proceedings were initiated solely on the basis of the same facts that were considered during the first assessment. The AO had already determined the genuineness of various creditors in the initial assessment and made additions accordingly. The subsequent notice and reassessment were deemed to be a case of change of opinion, which is not a valid ground for reassessment as per established legal principles. Citing relevant case laws such as Andhra Bank Ltd. vs. CIT and CIT vs. Paper Products Ltd., the Tribunal affirmed that reassessment cannot be made solely on the basis of a change in the AO's opinion. The legal position was further reinforced by the decision in CIT vs. Kelvinator of India Ltd., emphasizing that the AO lacks the authority to revisit an assessment based on the same set of facts.3. Consequently, the Tribunal upheld the decision of the CIT(A) to quash the reassessment proceedings, deeming them as a mere change of opinion by the AO. The appeal by the Revenue was dismissed, affirming the legality of the CIT(A)'s order in setting aside the assessment order dated 28th March, 2003. The judgment serves as a significant reminder of the limitations on the AO's power to initiate reassessment based on a mere change of opinion, emphasizing the importance of adhering to established legal principles in tax assessments.