ITAT Quashes Reopening of Assessment against WBEIDC, Holds it was Based on Mere Change of Opinion [Read Order]
The Tribunal observed that reassessment cannot be sustained in the absence of any new ‘tangible material’
The Income Tax Appellate Tribunal (ITAT) at Kolkata has set aside the reassessment proceedings initiated against West Bengal Electronics Industry Development Corporation Limited, holding that the reopening was based solely on a mere change of opinion. This amounted to a review of the original assessment, which was found impermissible by the Bench.
West Bengal Electronics Industry Development Corporation Limited is a government company and the nodal agency of the Government of West Bengal for development of the information technology and IT-enabled services sector in the State. A scrutiny assessment under Section 143(3) was completed in March 2015 for ITR pertaining to AY 2012-13 and 2013-14 filed by assessee.
The Assessing Officer reopened the assessment by issuing notice under Section 148 on the ground that the assessee had allegedly claimed excess standard deduction under Section 24(1) by applying the 30% deduction not only on rental income but also on electricity recovery charges, service charges and permission fees. This led to an addition of over Rs. 1.67 crore.
The reassessment was upheld by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre.
While examining the validity of the reopening, the Tribunal noted that it was based on a belief of escapement of income. This belief stemmed purely from re-examination of existing records, without any fresh material.
Relying on the landmark Supreme Court ruling in CIT v. Kelvinator of India Ltd., the Tribunal held that reassessment proceedings cannot be initiated on a mere change of opinion. The Bench also referred to another Supreme Court decision in Mangalam Publications v. CIT, reiterating that reopening based on primary documents already on record amounts to review, which is not permissible under the Act.
The Tribunal, comprising Rajesh Kumar (Accountant Member) and Pradip Kumar Choubey (Judicial Member), concluded that the Assessing Officer lacked jurisdiction to reopen the assessment. The mandatory condition for reopening, i.e. existence of new ‘tangible material’ was not satisfied. Accordingly, the reopening as well as the consequential reassessment orders were quashed.
The appeals were allowed in favour of the assessee.
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