2002 (10) TMI 252 - AT - Income Tax

Summary

Issues Involved:
1. Validity of notice issued under Section 148 of the IT Act, 1961, for reopening of the assessment under Section 147.
2. Validity of reassessment orders.
3. Grounds for reopening the assessment.
4. Limitation period for issuing notice under Section 148.
5. Whether the reassessment was based on a mere change of opinion.

Issue-wise Detailed Analysis:

1. Validity of Notice Issued under Section 148:
The assessee challenged the validity of the notice issued under Section 148 on various grounds, including that the notice was issued after the expiry of more than six years from the end of the assessment year under consideration, and that the reasons for reopening were not provided. The Tribunal found that the reasons for reopening the assessment were duly shown to the authorized representative of the assessee, and thus, this plea of the assessee was rejected.

2. Validity of Reassessment Orders:
The reassessment orders were challenged on the grounds that they were based on a mere change of opinion and not on any new information. The Tribunal held that the reassessment proceedings were invalid as they were initiated merely on the basis of a change of opinion and not on any new material facts. The reassessment orders were, therefore, quashed.

3. Grounds for Reopening the Assessment:
The Tribunal examined whether the notice was issued on the ground of failure on the part of the assessee to disclose material facts fully and truly or on the basis of new information. It was found that the assessee had disclosed all material facts during the original assessment proceedings, and the reopening was based on a mere change of opinion. Thus, the reopening was not justified.

4. Limitation Period for Issuing Notice under Section 148:
The Tribunal held that the notice issued under Section 148 was time-barred as it was issued after the expiry of four years from the end of the relevant assessment year. The amended provisions of Section 147, effective from 1st April 1989, were applicable, and the period of limitation was only four years unless there was a failure on the part of the assessee to disclose material facts fully and truly.

5. Whether the Reassessment was Based on a Mere Change of Opinion:
The Tribunal found that the reassessment proceedings were initiated merely on the basis of a change of opinion and not on any new information. The original assessment had already considered the relevant material facts, and there was no new material fact that came to the notice of the AO. Thus, the reassessment based on a change of opinion was not valid.

Conclusion:
The Tribunal allowed the appeals of the assessee, quashing the reassessment orders for the assessment years 1988-89, 1989-90, 1990-91, and 1991-92. The reassessment proceedings were found to be invalid as they were based on a mere change of opinion and were time-barred. The notices issued under Section 148 were also held to be invalid. The Tribunal's decision was based on the principles that reassessment cannot be initiated on the basis of a mere change of opinion and that the limitation period for issuing notice under Section 148 must be strictly adhered to.