Mere Change of Opinion by AO can't be a Reason to Reopen Assessment Proceeding u/s 147 of Assessment Proceeding: ITAT [Read Order]

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) held that a mere change of opinion by the Assessing Officer cannot be a reason to reopen the assessment proceedings under Section 147 of the Income Tax Act, 1961.

The assessee filed a return of income under Section 139(1) of the Income Tax Act declaring a total income of ₹4,50,177/-. The case was selected for scrutiny and an assessment order under Section 143(3) of the Income Tax Act was passed, determining the total income at ₹10,39,054/-.

After the assessment, the Assessing Officer discovered that while estimating the income of the assessee, the assessing officer had failed to add the sundry creditors of ₹1,63,03,871/- to the total income of the assessee, even though, the assessee had failed to furnish details and evidence of their genuineness. Therefore, the assessing officer had reason to believe that income to the tune of ₹1,63,03,871/- had escaped assessment and the case was reopened under Section 147 of the Income Tax Act.

The counsel for the assessee submitted that the re-assessment proceedings are liable to be set aside on the ground that the same amounts to “change of opinion”, since the issue of sundry creditors, on the basis of which additions have been made in the re-assessment proceedings, was raised and discussed in detail during the course of the original assessment proceedings.

It was submitted that the issue of “sundry creditors” being unverifiable was raised by the assessing officer and after taking into consideration the facts of the case estimated the income @ 5% of the total turnover, on the ground that due to non-production of books of accounts for verification the plea of the assessee to adopt 2% was rejected and the Assessing Officer proceeded to determine total income @ 5% of the total turnover.

It was further submitted that it is not permissible for the assessing officer to initiate 147 proceedings on the same set of facts, which would amount to a “change of opinion”, given the facts of the instant case.

In the case of Kelvinator India Ltd. 187 taxmann 312, the Supreme Court held that “mere change of opinion” cannot be per se a “reason to reopen” the assessment proceedings which have already been concluded.

The Two-member bench comprising of Annapurna Gupta (Accountant member) and Siddhartha Nautiyal (Judicial member) held that the re-assessment proceedings have been initiated on a “mere change of opinion” and hence the same are not liable to be sustained.

Accordingly, the re-assessment order having been passed on “mere change of opinion” was liable to be quashed. Thus, the appeal of the assessee was allowed.

To Read the full text of the Order CLICK HERE

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