Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (2) TMI 1372 - AT - Income TaxValidity of reopenIng of assessment - Notice after a period of four years - reasons to believe - HELD THAT:- We are of the opinion that if the AO wants to invoke the provisions of section 147 after a period of four years, he has to compulsorily elaborate that there was failure on part of the assessee to disclose truly and fully the relevant facts to decide the taxability of that particular year. The courts are of the view that not only the fact of failure of the assessee has to be mentioned it has to be explained as to how assessee had failed and his failure ended in under assessment/escapement of income. Where the provisions of section 147 are being invoked after the period of four years from the end of the relevant assessment year, in addition to the AO having reason to believe that any income chargeable to tax had escaped assessment, it must also be established as a fact that such escapement of assessment had been occasioned by either the assessee failing to make a return under section 139 either, etc. , or by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment year. Undisputed facts of the present cases are that the assessee original assessment was completed u/s. 143(3) of the Act, that the AO had not mentioned, in the reasons recorded for reopening of the assessments, that because of the failure of the assessee to disclose the material facts truly and fully income had escaped assessment. As the basic and first pre-requisite for issuing the notice is not fulfilled, so, the assessment orders passed in pursuance of such notices have to held to be invalid. Considering the facts and circumstances of both the cases, we are of the opinion that the orders of the FAA does not suffer from any legal or factual infirmity. So, upholding his orders for both the years i. e. 1997-98 and 1998-99, we decide the effective ground of appeal against the AO. Reopening of assessment - whether assessee was entitled for deduction of the whole lease rent ? - HELD THAT:- No new material had come in possession of the AO to disturb the completed assessment. He had changed his opinion about the treatment to be given rental income. In our opinion, in absence of some cogent material AO cannot initiate proceedings u/s. 147 of the Act. We also find that if the order of the FAA was to be implemented there would not be any escapement of income for any of the years. In both the years the depreciation and interest would be more than the rental income, if the transaction with regard to leased assets was to be treated financial transaction. With regard to the argument that the AO had not formed any opinion, as he had not discussed anything in the assessment order, we would like to mention that in the matter of Prima Paper and Engineering Industry [2015 (2) TMI 803 - BOMBAY HIGH COURT] as well settled that the power to reopen an assessment is not a power of review and mere change of opinion would not justify reopening of an assessment. This would apply even when assessment sought to be reopened is within four years from the end of the assessment year. Revenue does not dispute the fact that the issue with regard to which the reopening is sought to be done was the subject matter of discussion and deliberation before the AO during the original proceedings leading to the order - Also it is an undisputed position that the Assessing Officer did have occasion to apply his mind to the deduction claimed by the respondent-Assessee before allowing the same. The objection of the revenue that there was no opinion formed during the original assessment proceeding as the order did not deal with the same is unsustainable. The mere fact that the assessment order does not discuss the issue of deduction would not lead to the conclusion that the Assessing officer had made no opinion with regard to the issue. Thus we are of the opinion that the re-opening was not based on valid reasons and there was no escapement of income for both the years. Assessee appeal allowed.
|