No "Change of Opinion" to Reopen Scrutinized Assessment: ITAT Quashes Reassessment Beyond 4 Years [Read Order]

The Pune Bench of the Income Tax Appellate Tribunal (ITAT) has quashed the reassessment made beyond 4 years, citing no "Change of Opinion" to reopen the scrutinised assessment.

Lorgan Lifestyle Limited, the assessee is a partnership firm and income of Rs.34,77,401/- declared in the return of income for A.Y. 2011-12 filed on 29.09.2011. Cases selected for regular complete scrutiny and various details called for by the Assessing Officer were submitted in response to notice under section 142(1) of the Act.

Assessment under section 143(3) completed on 14.02.2014 accepting the returned income. Thereafter, notice under section148 of the Act issued on 30.03.2018 for reopening of the assessment. The assessee raised objections which were disposed of. Assessee filed a return in compliance to notice under section148 of the Act declaring the same income as was declared in the original return.

The main reason for reopening was to examine the purchases made from three parties which as per the Assessing Officer are allegedly engaged in providing accommodation entries. Assessee furnished all the details about the purchases made from the three parties out of which purchases against H Form were made from the two parties namely Akshata Enterprises and Sangam Enterprises and purchase of tax free textiles were made from the third party namely Citybase Multitrade Pvt. Ltd.

Assessee also contended that all the goods have been exported. However, The Assessing Officer without disputing the gross turnover including exports, concluded the proceedings making addition for bogus/inflated purchases and assessed income at Rs.7,20,93,809/-.

Aggrieved assessee preferred appeal before CIT(A) but failed to succeed. Now the assessee is in appeal before this Tribunal.

Assessee raised the legal issue challenging the validity of reopening proceedings carried out beyond four years stating that it is a mere change of opinion as the assessee has truly and fully disclosed all material facts in the return as well as details have been filed in the regular scrutiny proceedings under section 143(3) of the Act and there being no independent investigation or new information available with the Assessing Officer which could show that assessee has not disclosed the same in the income tax return and previous assessment proceedings under section 143(3) of the Act.

On the other hand, DR submitted that the objections raised by the assessee have been duly disposed of and since the assessee could not produce the bank statement of suppliers, their tax returns, purchases remained unverified and therefore the reopening is valid.

The legal issue has been raised by the assessee challenging the validity of reassessment proceedings carried out beyond four years from the end of relevant assessment year on the ground that without any independent investigation and new information. The Assessing Officer has carried out the reassessment proceedings based on the information already available in the assessment records of the regular scrutiny proceedings under section 143(3) of the Act.

It has been consistently held that in a case where the assessee has filed regular return of income and has also passed through regular scrutiny proceedings under section 143(3) of the Act and the assessee has disclosed fully and truly all material facts necessary for its assessment and if after four years the re-assessment proceedings are initiated without referring to any new information or independent investigation by the Assessing Officer then such

The Tribunal found that this reopening was impermissible. The Bench observed that where a regular assessment under section 143(3) of the Act has been completed, invoking Section 147 of the Act to re-examine already scrutinized issues is "bad in law."

The Tribunal cited the Supreme Court’s decision in Lupin Ltd. v. R.B. Wadkar (2015) 10 SCC 718), which holds that in the absence of independent investigation or new material, a reassessment based merely on a "change of opinion" is not valid.

Consequently, the Tribunal quashed the reassessment and set aside the additions. The legal principle reinforced is that once scrutiny is complete, the Assessing Officer cannot revisit the same facts merely to overturn a prior conclusion.

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