2023 (3) TMI 284 - AT - Income Tax

Reopening of assessment u/s 147 - notice beyond a period of four years from the end of the assessment year Reasons to believe - Disallowance of the prior period expense treating the same as expenditure of earlier years - the same has been booked as expenditure only due to the reversal of entry of earlier years where the same was shown as income - HELD THAT:- In the case of ICICI Securities Primary Dealership Ltd. [2012 (8) TMI 754 - SC ORDER] AO completed assessment of assessee under section 143(3) after taking into consideration account furnished by assessee. After lapse of four years from relevant assessment year Assessing Officer reopened assessment of assessee on ground that during relevant year assessee company had incurred a loss in trading in share, which was a speculative one and therefore chargeable to tax. Accordingly, AO passed order under section 147 of the Act. The Hon'ble Supreme Court held that since after a mere re-look of accounts which were earlier furnished by assessee, Assessing Officer had come to conclusion that income had escaped assessment, same was not permissible under section 147 as it was clearly a change of opinion. Therefore, order re-opining assessment was not permissible.

In the case of Godrej & Boyce Mfg. Co. Ltd. [2022 (4) TMI 639 - BOMBAY HIGH COURT] the High Court held that where Assessing Officer completed original assessment under section 143(3) and subsequently he issued notice seeking to reopen such assessment for reason that interest bearing funds had been used for making addition of capital work-in-progress and hence interest paid in respect of capital borrowed for addition to capital work-in-progress should have been added back and capitalized as per provisions of section 36(1)(iii), as reasons did not indicate that there was failure to disclose truly and fully all material facts, impugned notice deserved to be quashed.

Accordingly, in view of our observations in the preceding paragraphs and in light of the above judicial precedents highlighted above, we are hereby directing that the present reassessment proceedings are liable to be set aside. Since, we are quashing the notice issued u/s 147 of the Act on grounds of jurisdiction itself, we are not separately adjudicating on other Grounds of Appeal filed by the assessee.