https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=760283 https://www.taxtmi.com/caselaws?id=760283 Reopening of assessment - reason to believe or change of opinion - interest income should be assessed as income from other sources and taxed separately without setting off against the current year s business loss of the club - HELD THAT:- Assessee is running race club and having income from business and other sources, filed its return of income by claiming a current loss for the impugned Assessment year. Which was selected for scrutiny and completed the assessment order u/s.143(3) and the same was partly allowed by the CIT(A). The very same issue has been raised in the notice issued by the AO u/s. 148 for reopening the original assessment and passed an order u/s. 143(3) r.w.s 147 - On appeal, CIT(A) was pleased to confirm the same. Reasons for reopening was questioned by the assessee stating that the very same issues have already been subject matter of original assessment and have been drawn from the existing materials of the assessment records hence the reopening of assessment is bad in law, however the AO was not convinced and continued to proceed with the reassessment. The reason to believe was judicially interpreted to mean an independent belief of the AO not based on borrowed satisfaction or opinion of another authority . Such reason to believe was to be based on new tangible material and not on material already available on record . The Hon ble Supreme Court in Calcutta Discount Co. Ltd.[ 1960 (11) TMI 8 - SUPREME COURT] held that even if the conclusion drawn by the AO from the facts disclosed by the assessee during the course of original assessment is erroneous, the AO cannot reopen the assessment to change that erroneous conclusion once reached at. Also in CIT v. Kelvinator of India Ltd.[ 2010 (1) TMI 11 - SUPREME COURT] held that mere change of opinion cannot per se be a reason to reopen the concluded assessment. The Court highlighted the conceptual difference between power to review and power to reassess and that review cannot be done in the garb of reopening the assessment. The concept of change of opinion must be treated as an in-built test to check abuse of power by the AO. CBDT in Circular No. 549 dated 31 October 1989 provided that it was to allay the fears that the AO shall reopen past assessments on mere change of opinion that the expression has reason to believe was reintroduced in place of the words for reasons to be recorded by him in writing, is of the opinion (by the Amending Act, 1989) in the then existing Section 147 of the Act. The Circular itself indicates that Legislature has never been the intention to permit the Assessing Officer to reopen an assessment on the basis of change of opinion . Therefore, in the cases where an original assessment had taken place and the Assessing Officer had formed a particular view based on the available material, the Assessing Officer could not have validly reopened an assessment. In the present case, the AO has reopened the original assessment with no fresh tangible material but based on the material available in the assessment records which was also taken upto the CIT(A). Therefore, the action of the AO/CIT(A) cannot be countenanced. Assessee appeal allowed. Case-Laws Income Tax Wed, 16 Oct 2024 00:00:00 +0530