2025 (2) TMI 573 - AT - Income Tax

Reopening notice under Section 148 quashed for bad debts disallowance as mere change of opinion

Samtel India Limited Versus Asst. CIT, Circle-22 (1), New Delhi.

Samtel India Limited Versus Asst. CIT, Circle-22 (1), New Delhi. - TMI The appeal in this case was filed by the Assessee against the order of the Learned Commissioner of Income Tax (Appeals)-8, New Delhi, for the Assessment Year 2007-08. The Assessee raised several grounds of appeal, including challenging the reopening of the assessment under section 148 of the Income Tax Act, 1961, and contesting the addition of certain amounts written off by the Assessee in its books of accounts.The main issue before the Appellate Tribunal was whether the reopening of the assessment by the Assessing Officer was justified or amounted to a mere change of opinion. The Assessee argued that all material facts were available on record and had been duly considered during the original assessment under section 143(3) of the Act. The Assessee contended that the reassessment proceedings were solely based on audit objections and did not involve any fresh material. The Assessee relied on judicial pronouncements to support its argument that the reassessment was a mere change of opinion and should be quashed.On the other hand, the Senior Departmental Representative supported the lower authorities' decision and argued that the Assessee had not provided complete details of the bad debts claimed during the original assessment proceedings. The Senior Departmental Representative contended that the Assessing Officer had not formed an opinion on the claim of bad debts due to incomplete information provided by the Assessee. The Senior Departmental Representative cited relevant case law to support the position that the reopening of the assessment was justified.After hearing both parties and examining the facts and arguments presented, the Appellate Tribunal held that the reopening of the assessment was not based on fresh material but was a mere change of opinion. The Tribunal referred to the judgment of the Supreme Court in CIT Vs. Kelvinator of India Ltd., which emphasized that the Assessing Officer does not have the power to review but only to reassess based on certain pre-conditions. The Tribunal concluded that the reassessment in this case did not meet the criteria for valid reassessment and therefore quashed the notice issued under section 148. Consequently, the Assessee's appeal was allowed.In light of the Tribunal's decision to quash the reopening of the assessment, the other grounds of appeal related to the merits of the additions were deemed academic and not adjudicated upon. The Tribunal pronounced its order on 12.02.2025, in favor of the Assessee.