Reassessment Proceedings can’t be initiated on Mere Change of Opinion: Orissa High Court [Read Judgment]

The Orissa High Court held that the reassessment proceedings cannot be initiated on mere change of opinion.

The Petitioner, Jagannath Promoters is a partnership firm. It filed its return for the AY in question on 16th November 2009 disclosing a total income of Rs. 15,30,110/-. The return was picked up for scrutiny. In response to the notices under Sections 142 (1) and 143 (2) of the Act, the Petitioner appeared before the Assistant Commissioner, AO Berhampur Circle, Berhampur, and produced its books of account including cashbook ledger, audit report, balance sheet, and profit and loss (P & L) account. The AO, after examining the documents, issued on 19th October 2011 a detailed questionnaire to the Assessee which again the Assessee responded to. On 5th December 2011, the AO passed the assessment order under Section 143 (3) of the Act determining the der Section 143 (3) of total taxable income as Rs.18.43.708/-. Accordingly, the tax payable was determined as Rs.1,39,054/-. In the assessment order, the AO disallowed Rs.3,13,600/- on account of sundry creditors.

The petitioner has assailed a notice dated 16th September 2013 issued by the Deputy Commissioner of Income Tax, Berhampur Circle, Berhampur under Section 148 of the Income Tax Act, 1961 seeking to reopen the assessment of the Petitioner for the assessment year 2009-10.

The division bench is headed by the Chief Justice, S.Muralidhar, and Justice B.P.Routray held that the reasons for reopening the assessment do not point to any new material that was available with the (new material the Department. What appears to have happened is that the same. material viz., the accounts produced by the Assessee were re-examined and a fresh opinion was arrived at by the Opposite Party No.1 regarding the claim of the deduction of Rs.48,183/- on account of the loss of sale of assets. This had already been disclosed in the detailed accounts filed by the Assessee. In fact, a questionnaire had been issued by the AO in the course of the original assessment proceedings to the Assessee which was responded to by the Assessee. In other words, there was a conscious application of mind by the AO to the said materials. Therefore, the inevitable conclusion as far as the present case is concerned is that the reason to believe' of the Opposite Party that income for the AY in question had escaped assessment is based on a mere 'change of opinion.

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