2023 (6) TMI 1456 - HC - Income Tax

Reopening of assessment u/s 147 - notice after a period of four years - change of opinion - HELD THAT - Where assessment was not sought to be reopened on the reasonable belief that income had escaped assessment on account of failure of assessee to disclose truly and fully all material facts that were necessary for computation of income but was a case wherein assessment was sought to be reopened on account of change of opinion of AO the reopening was not justified. It is also held that where primary facts necessary for assessment are fully and truly disclosed the AO is not entitled to reopen the assessment on a change of opinion. It is held that while considering the material on record one view is conclusively taken by AO it would not be open for the AO to reopen the assessment based on the very same material and take another view. In the present case the Respondent No. 1 has received information from the office of DGIT (Inv.) that Khush Hindustan Ent. Ltd. has issued accommodation entries to the Petitioner for financial year 2008-09. Even though the Petitioner has placed on record the Balance Sheet and pointed out that there is no change in the capital of 60 lakhs and no sum has been received leave alone on account of share premium the Respondents have sought to take a stand that at this stage they are not required to look into the sufficiency and correctness of the information and can consequently reopen the case. Upon a bare perusal of the Balance sheet it is evinced that there is no transaction which would show a live link or nexus with the alleged transaction viz. receipt on account of share pre-mium as alleged by the Respondent. Besides the Respondent has failed to aver the particulars of the information available which has led to the belief that income has escaped assessment. There appears no new tangible material available on record to conclude that income had escaped assessment. In our view it is clearly a change of opinion - Decided in favour of assessee.

Summary

Issues:
Challenge to notice under section 148 of the Income-tax Act, 1961 for reassessment of income for AY 2009-10.
Validity of the order rejecting objections raised against the notice.

Analysis:
The judgment challenges a notice under section 148 of the Income-tax Act, 1961, issued for reassessment of income for the assessment year 2009-10. The petitioner objected to the notice, arguing that no sum of Rs. 34,50,000 was received as alleged on account of share premium. The Respondent No. 1 relied on the Supreme Court judgment in the case of Raymond Woollen Mills (1999) and rejected the objections raised by the petitioner. The court referred to the criteria for reopening assessments after four years, citing the judgment in the case of Ananta Landmark P. Ltd v Dy. CIT, emphasizing that assessment cannot be reopened based on a mere change of opinion without new tangible material. The court highlighted the requirement of a rational connection between the material and the formation of the belief of income escapement, as established in the case of ITO vs Lakhmani Mewal Das (1976).

The court noted that the Respondent No. 1 received information that the petitioner received accommodation entries from a specific entity for the financial year 2008-09. However, the petitioner demonstrated through the balance sheet that no sum was received as alleged. The court observed that there was no live link or nexus with the alleged transaction of receiving Rs. 34,50,000 as share premium. The respondents failed to provide particulars of the information leading to the belief of income escapement, indicating a lack of new tangible material to support the reopening of the assessment. The court concluded that this was a mere change of opinion without sufficient grounds.

In the final order, the court quashed and set aside the impugned notice dated 13th March 2015 and the order dated 30th December 2015 issued by Respondent No.1 for AY 2009-10. The court made the rule absolute in favor of the petitioner, without imposing any costs.