The Chennai Bench of Income Tax Appellate Tribunal (ITAT) held that in the absence of any new tangible material, the case could not be reopened on mere change of opinion,the reassessment proceedings were nothing but the review exercise undertaken by Assessing Officer (AO) which is impermissible. Therefore,the reassessment proceedings are bad in law and hence, quashed.
The assessee V.K. Sasikala being resident individual is stated to be engaged in publication of newspapers etc. The original return of income filed by the assessee was scrutinized under Section 143(3) of the Income Tax Act,1961 determining the income at Rs.529.40 Lakhs.
Subsequently, it was noted by AO that the assessee had furnished the statement of accounts without incorporating the opening balances.
The Assessment process was reopened by the AO. Accordingly, notice under Section 148 of the Income Tax Act was issued within 4 years from the end of relevant assessment year. The AO referred to Explanation-1 to Section 147 of the Income Tax Act which specifically provides that production of accounts books or material for evidences will not necessarily amount to disclosure within the meaning of Section 147 of the Income Tax Act.
Aggrieved by the order, the assessee filed an appeal before Commissioner of Income Tax Appeals [CIT(A)] upheld the action of the AO against which the assessee is in further appeal before the ITAT.
The Authorised Representative of the assessee submitted that the AO has not referred to any tangible material coming into his possession which would lead to formation of a belief that certain income escaped assessment in the hands of the assessee.
Apparently, reassessment has been initiated on the same set of material as available before AO during the course of original assessment proceedings. This being so, the reassessment proceedings would be nothing would review of the order which is impermissible.
The Bench comprising of V. Durga Rao, Judicial Member and Manoj Kumar Aggarwal, Accountant Member observed that in the absence of any new tangible material, the case could not be reopened on mere change of opinion.
It was also stated that the AO has power to reopen the case of the assessee provided there is ‘tangible material’ to come to conclusion that there is escapement of income from the assessment.
The Tribunal held that the reassessment proceedings were nothing but the review exercise undertaken by AO which is impermissible. Therefore,the reassessment proceedings are bad in law and hence, liable to be quashed.
Thus, the assessment order was held to be invalid.
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