No Power to Review by Reopening Assessment under Section 147 of Income Tax Act if no Addition made by AO During Original Assessment : ITAT [Read Order]

The Surat Bench of Income Tax Appellate Tribunal (ITAT) held that Assessing Officer has no power to review by reopening assessment under Section 147 of the Income Tax Act,1961 if no addition is made by AO during original assessment.

The assessee Murlimanohar Ramkishan Mundhra is an individual and engaged in trading and manufacturing of textile fabrics, filed his return of income declaring income of Rs.4,68,140/- for the assessment year 2013-14. The assessment was completed under Section 143(3) of the Income Tax Act at Rs.5,17,750.

The Assessing Officer (AO)  found that assessee has shown interest received of Rs. 20,773/- under the head “income from other sources” against which, the amount of Rs.6,49,951/- was claimed as deduction on account of interest paid to other parties. The AO was of the view that income of assessee to the extent of Rs.6,49,951/- as escaped assessment within the meaning of Section 147 of the Income Tax Act. The Assessing Officer disallowed expenditure of Rs.6,49,951/in the assessment order dated  under Section 143(3) r.w.s. 147 of the Income Tax Act.

Aggrieved by the Order of the Assessment, assessee preferred an appeal before the Commissioner of Income-Tax (Appeals) [CIT(A)],which confirmed the action of AO. Further aggrieved the assessee filed an appeal before the Tribunal.

The Authorised Representative of the assessee re-opening was nothing but a change of opinion. In the original assessment deduction was allowed on the same set of fact and even in the excess deduction was allowed will be changed of opinion.

Further he contended that the Assessing Officer has no power to review but to re-assess the assessment was based on fulfilled of certain conditions.

The Departmental Representative submitted that the assessee wrongly claimed the deduction under Section 57(iii) of the Income Tax Act to the extent of Rs.6,49,951/-, which was not allowable expenditure.

The single Bench comprising of Pawan Singh, Judicial Member held that Section 147 of the Income Tax Act does not allow the re-assessment of an income merely because of the fact that the assessing officer has a change of opinion with regard to the interpretation of law differently on the facts that were well within his knowledge even at the time of assessment.

Further it was held that reopening under Section 147 of the Income Tax Act is nothing but based on changed of opinion on same set of facts, which is not valid. Thus, the action of reopening of assessment is set aside.

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