Re-Assessment based on mere Change of Opinion is not Valid: ITAT [Read Order]

The Raipur bench of the Income Tax Appellate Tribunal (ITAT) has held that the re-opening of the assessment order under section 147 of the Income Tax Act, 1961 based on a mere change of opinion is not sustainable and quashed the order passed by the CIT(Appeals), Bilaspur, dated 30.11.2016

The assessee, Shri Parmanand Gupta engaged in the business of trading Kosa cloth & yarn and manufacturing cloth for shirting and sarees under the name and style of M/s. Balaji Handloom had filed his return of income declaring an income of Rs.4,96,950/-.

Based on information received from the DDIT (Inv.)-III, Raipur regarding a substantial amount of cash deposits in the bank accounts of the assessee, the case of the assessee was reopened by the A.O u/s.147 of the Act. The assessee had failed to substantiate the nature and source of the cash deposits in his bank accounts based on supporting documentary and the A.O held the entire amount of cash deposits of Rs. 5,22,81,663/- as unexplained cash credits u/s.68 of the Act.

It was observed by the CIT(Appeals) that though the assessee because of beggaries of the occupation of the weavers may not be in a position to furnish their complete details and for the same reason could not have justifiably recharacterized his duly accounted sale transactions as unexplained cash credits u/s. 68 of the Act.

The Tribunal observed that the case of the assessee had been reopened by the A.O u/s.147 of the Act and was not based on any fresh tangible material coming to the notice of the A.O. The case of the assessee was reopened by the AO based on information received from the DDIT (Inv.)-II, Raipur that certain cash deposits in the bank accounts of the assessee could not be verified.

Shri Ravish Sood, judicial member and Shri Arun Khodpia, accountant member held that “not only the aforesaid details of cash deposits in the bank accounts of the assessee were very much there before the A.O in the course of the original assessment proceedings, but in fact, the same had duly been considered and accepted by him as the duly accounted sale proceeds of the assessee.”

The Tribunal observed that the case of the assessee had been reopened with the purpose to re-visit the assessment based on a mere change of opinion, which was not permissible in the eyes of law, thus, the assessment framed by the AO is liable to be struck down for want of jurisdiction on his part on the said count.

The assessee was represented by Shri R.B Doshi and the revenue was represented by Shri Sanjay Kumar.

To Read the full text of the Order CLICK HERE

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