TMI Blog2023 (9) TMI 758X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be reopened on a mere change of opinion and more particularly, in the absence of any fresh tangible material ? - The first assessment order is based upon the information and details provided by the Petitioner including material relating to his immovable property and the deductions under Section 54(F) of the Act have been computed on the basis of the material provided by the Petitioner. Thus, the AO had in his possession all the primary facts and it was for him to make necessary inquiries and draw proper inference as to whether deductions as claimed under Section 54(F) of the Act were to be allowed or otherwise while working the computations. Thus, it can be safely held that the reopening of the assessment order is clearly on the basis of a change of opinion and that too without surfacing of any tangible new information. As noted earlier, a perusal of the communications reveal that there was nothing more to disclose and a person cannot be said to have omitted or failed to disclose information which clearly has been placed before the AO at the time of issuance of the first assessment order. It is settled law that the reasons for reopening an assessment can be tested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration. By reply dated 13th February 2017 and 22nd February 2017, the Petitioner furnished all required details. Assessment order dated 25th May 2017 was passed after considering the submissions of the Petitioner. 4. A notice dated 26th March 2021 under section 148 of the Act was issued to reopen the AY 2015-16 assessment. Another Notice under Section 142(1) of the Act was also issued requiring the Petitioner to file return of income in response to notice under Section 148 of the Act. The Petitioner filed the return of his income by replies dated 31st July 2021 and 2nd August 2021. The Petitioner sought the reasons recorded by the AO to issue notice under Section 148 of the Act but it is the case of the Petitioner that a copy of the recorded reasons has not been furnished to him till date. Once again by notice of 12th December 2021 followed by a reminder dated 24th January 2022, the Petitioner was specifically asked to explain the claim of deduction under Section 54(F) of the Act. The Petitioner brought to the attention of the AO that he had already furnished the details but resubmitted the details required and once again placed on record that the reasons recorded have not bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. Petitioner objected to the notice issued for want of providing recorded reasons 9. Order disposing objections 24.03.2022 10. Assessment Order was passed 27.03.2022 Thus, the Petitioner argues that having complied with the notice under Section 148 of the Act, it was imperative on the AO to provide reasons and the Respondents are in gross violation of law as laid down by the Apex Court. 8. It is also argued on behalf of the Petitioner that the impugned notice dated 26th March 2021 under Section 148 of the Act was issued after the expiry of four years from the end of the relevant assessment year and resultantly the first proviso to Section 147 of the Act shall apply. Mr. Gandhi submits that there was no failure on the part of the Petitioner to disclose fully and truly all material facts necessary for the assessment year under consideration. The reopening of assessment is simply on the basis of verified facts on record and there is no allegation of any failure of the Petitioner. 9. Thirdly, Mr. Gandhi a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment is reopened as per the relevant provisions of the Act after taking due approval from the Additional Commissioner of Income Tax. The original time-barring date for issue of notice under Section 148 of the Act for AY 2015-16 being 31st March 2020 stood extended by various Notifications of the Central Board of Direct Taxes ( CBDT ) and hence the sanction has been accorded by the Competent Authority. 11. We have heard both the parties and perused the documents on record. Section 147 of the Act authorizes the reopening of any assessment of a previous year. 1 Section 148 contains conditions for reopening assessments, including the limitation period within which notices can be issued. 7 Alluding straight away to the decision of the Supreme Court in the GKN Driveshafts (supra) which clarifies that when a notice under Section 148 of the Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing the notice. The AO is bound to furnish reasons within a reasonable time. On the receipt of reasons, the noticee is entitled to file objections to issuance of notice and the AO is bound to dispose of the same by pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his immovable property. Yet, the AO has issued a notice under Section 148 of the Act on 26th March 2021 clearly after a period of four years. That being so, the first proviso of Section 147 of the Act is clearly applicable. 3 The test, therefore, is whether the assessee has disclosed fully and truly all material facts necessary for his assessment for that AY. The contents of the aforementioned letters are sufficient to hold that the Petitioner has disclosed information regarding the transactions of his immovable property and that also in response to specific queries raised during assessment proceedings. In these circumstances the Petitioner has clearly proved his creditworthiness by disclosing the relevant material and the Revenue cannot claim protection of the exception in the first proviso to Section 147 of the Act. The relevant finding in the decision relied upon by the Petitioner in the matter of Gemini Leather Stores (supra) reads as follows: Once all the primary facts are before the Assessing Authority, he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ulti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to take another view. 15. It will also be useful to reproduce paragraphs 12 and 14 of Aroni Commercials (supra) which reads as under: 12. Therefore the power to reassess cannot be exercised on the basis of mere change of opinion i.e. if all facts are available on record and a particular opinion is formed, then merely because there is change of opinion on the part of the Assessing Officer notice under Section 147/148 of the Act is not permissible. The powers under Section-147/148 of the Act cannot be exercised to correct errors/mistakes on the part of the Assessing Officer while passing the original order of assessment. There is a sanctity bestowed on an order of assessment and the same can be disturbed by exercise of powers under Sections 147/148 of the Act only on satisfaction of the jurisdictional requirements. Further, the reasons for reopening an assessment has to be tested/examined only on the basis of the reasons recorded at the time of issuing a notice under Section 148 of the Act seeking to reopen an assessment. These reasons cannot be improved upon and/or supplemented much less substituted by affidavit and /or oral submissions. Moreover, the reasons for reopenin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 2008-09. We are of the view that once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the Assessing Officer while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. If an Assessing Officer has to record the consideration bestowed by him on all issues raised by him during the assessment proceedings even where he is satisfied then it would be impossible for the Assessing Officer to complete all the assessments which are required to be scrutinized by him under Section 143(3) of the Act. Moreover, one must not forget that the manner in which an assessment order is to be drafted is the sole domain of the Assessing Officer and it is not open to an assessee to insist that the assessment order must record all the questions raised and the satisfaction in respect thereof of the Assessing Officer. The only requirement is that the Assessing Officer ought to have considered the objection now raised in the grounds for issuing notice under Section 148 of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner. Thereafter, the Draft assessment order in the form of a show cause notice dated 16th March 2022, was issued, which also did not contain any reasons as sought by the Petitioner. The reply of 21st March 2022 on behalf of the Petitioner also reiterates the background and facts of the case. The Petitioner has reiterated his objections of not being furnished any reasons recorded by the AO to reopen the assessment in the said letter. This entire communication trail corroborates the arguments advanced by the Petitioner that the Respondents have failed to comply the mandatory requirement of furnishing the reasons recorded to reopen the assessment, once the Petitioner files his returns pursuant to the notice under Section 148 of the Act. It is settled law that the reasons for reopening an assessment can be tested and examined only on the basis of the reasons recorded at the time of issuing the notice under Section 148 of the Act. The Revenue has not even placed on record any document to suggest that the reasons recorded have been furnished to the Petitioner. On this ground alone the assessment order impugned herein deserves to be quashed. 18. In view of the foregoing, we are sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year): 2. 148. Issue of notice where income has escaped assessment. ( 1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139: 3. Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, by reason of the failure on the part of the assessee to make a return u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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