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2022 (8) TMI 569 - AT - Income TaxReopening of assessment u/s 147 - validity of reassessment proceedings twice passed in this case - Reopening beyond period of four years - first reopening of assessment was initiated for the reason that the assessee has not deducted tax on the expenses such as, professional charges, interest others, interest on machinery finance charges, advertisement charges paid and remuneration to name lenders debited in the profit and loss account, which are required to be disallowed under section 40(a)(ia) - Case [second time] reopened the assessment on the ground that the profit admitted by the assessee on the sale of agricultural lands was not an agricultural land and the profit on sale of land earned by the assessee for the assessment year 2008-09 is to be brought to tax - as per CIT-A AO has not established what was the default on the part of the assessee to face the reassessment proceedings - HELD THAT:- On perusal of the first reassessment order under section 143(3) r.w.s. 147 of the Act dated 30.03.2013, as reproduced hereinabove, the assessee has furnished detailed submissions towards realizing net profit on sale of lands. In the assessment order, the AO has elaborately discussed on the sale of the impugned agricultural lands, scrutinized the documents and evidences submitted by the assessee and arrived at the findings that the profits from the sale of land being agricultural in nature are exempt from tax. Thereafter, having different opinion on the sale of land is not an agricultural land, AO again reopened the assessment, which is mere change of opinion and not permissible as per the law laid down in the case of CIT v. Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT] wherein, it was held that an assessment cannot be reopened on a mere change of opinion; reason to believe that the income chargeable to tax has escaped assessment is one of the conditions precedent for invoking the jurisdiction of the Assessing Officer to reopen the assessment under section 147 - The Hon'ble Supreme Court further observed that the Assessing Officer had power to re-assess but no power to review. If the concept of "change of opinion" is removed, review would take place in the garb of reopening of assessment. Thus, applying the ratio of the above judgment of the Hon'ble Supreme Court to the instant case, since no new material was brought on record after completion of assessment under section 143(3) r.w.s.147 of the Act dated 30.03.2013, the second reopening of assessment was not on account of any fresh material and it is only on a mere change of opinion, we are of the considered view that the reopening of assessment is liable to be quashed. Once the assessment was reopened beyond four years from the end of the relevant assessment year under consideration, the provisions of section 147 of the Act applies. Once the proviso to section 147 applies, it is the duty of the Assessing Officer to prove that the assessee has failed to furnish fully and truly all material facts to complete the assessment. In this case the Assessing Officer was not able to establish that there is failure on the part of the assessee to disclose fully and truly all materials. We, therefore, considering the entire facts and circumstances of the case, hold that the reopening is invalid beyond four years from the end of the relevant assessment year. As decided in the case of Fenner (India) Ltd. [1998 (11) TMI 66 - MADRAS HIGH COURT], the Hon'ble Jurisdictional High Court has held that the reasons recorded by the Assessing Officer did not establish even prima facie, a failure on the part of the assessee to fully and truly disclose the material fact for the assessment and accordingly quashed the notice. Thus, the service of notice under section 148 of the Act 11.03.2015 is liable to be held as bad in law. - Decided in favour of assessee.
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