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2023 (10) TMI 657 - HC - Income TaxReopening of assessment u/s 147 - Change of opinion - reasons to believe - large increase in cenvat creditors against reduction in business income as compared to the preceding year and that there was mismatch in the amount paid to related persons under section 40A(2)(b) - HELD THAT:- The petitioner in detail had furnished copies of audited financial accounts, copy of the assessment order of the year 2013-14, details of payments made to persons specified, copy of the ledger, accounts of the loans taken by the company etc. All this material was considered and an assessment order was passed on 26th of August 2016. All these further indicate that after a notice of demand was issued u/s 156 revenue had raised no demand. After a period of five years, the revenue has thought it fit to reopen the assessment proceedings purportedly under the guise of the same records on the ground that the material embedded in the records could not be discovered. This obviously is the stand taken by the revenue based on change of opinion as the return filed by the petitioner for the Assessment Year 2014-15 was scrutinised u/s 143 (3) of the Act. Once the assessee makes a true and full disclosure of the primary facts at the time of the original assessment and which could have been discovered with due diligence by the Income Tax Officer, drawing an inference which appears subsequently to be alone, is a mere change of opinion with regard to that inference which would not justify the action under the Act. One must read the concept of change of opinion as an inbuilt test to check abuse of power by the AO. AO has power to reopen provided there is tangible material to come to the conclusion that there is an escapement of income from assessment. It is a well settled principle of law that reasons must have a live link with the formation of the belief. What is evident from the facts of the cases in absence of a live link between the reasons to believe and the material on record. This court is of the opinion that when all facts were correctly disclosed and were on record during the assessment proceedings for the relevant assessment year and the assessing officer has not consciously taxed the income which is now sought to be looked into, it is a clear case of change of opinion. Decided in favour of assessee.
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