Non-consideration of certain information during original assessment is valid ground for reopening of assessment

Cognizant Technology Solutions India P. Ltd. Vs Asst.CIT (Madras High Court)

Facts- Impugned notice was issued under section 148 for reopening of the assessment. The petitioner questioned the legal validity of the initiation of the reopening proceedings.

Conclusion- If the Assessing Officer has reason to believe that the particular issue has not been considered or scrutinised during the course of original assessment proceedings, then he is empowered to reopen the assessment under Section 147/148 of the Act. Thus, Section 147 provides an opportunity to the Revenue to reopen the proceedings if the Revenue is able to trace out new information or materials within or from any other source for the purpose of reopening. The very same materials in which certain issues were not considered and such non-consideration resulted in escapement, then also reopening is permissible.

Wider scope contemplated under Section 147 for reopening of assessment to protect the interest of Revenue is to be interpreted pragmatically, so as to ensure that if the Assessing Officer has reason to believe, which is not change of opinion, then he must be allowed to complete the reassessment proceedings as contemplated under the provisions of the Act.

The respondent has established the reasons to believe for reopening of assessment, which is a pre-condition contemplated under section 147 of the act.

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