Case Law Details
Oracle Financial Services Software Limited Vs DCIT (Bombay High Court)
Existence of the reason to believe that income chargeable to tax has escaped assessment is a jurisdictional condition for invoking the power under section 147 of the Act, 1961, both within and beyond a period of four years from the end of relevant assessment year. The Assessing Officer is enjoined to record reasons before a notice to reopen the assessment under section 148 of the Act is issued. In case, the assessment is reopened beyond the period of four years, where the assessment was completed under section 143(3) of the Act, an additional condition that the income must have escaped assessment on account of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment is required to be fulfilled. The existence of reason to believe is further qualified by the fact that it should be based on tangible material. Firstly, it cannot be the product of mere ipse dixit of the Assessing Officer. Secondly, it should not partake the character of a mere change in opinion as regards the same material and facts, which were considered at the time of original assessment. For the power is of reassessment and not review. Once the primary facts necessary for assessment are fully and truly disclosed and the Assessing Officer takes a conclusive view thereon, it is not permissible to reopen the assessment based on the very same material on the premise that it is susceptible to a different opinion favourable to the revenue.
Undoubtedly, as pointed out by Shri Sharma, the issue has not been specifically dealt with in the assessment order. However, the said consideration is not decisive. As laid down in the case of Aroni Commercials Ltd. (Supra), once a query is raised during the assessment proceedings and the assessee has furnished a reply thereto, it implies that the query so raised was a subject matter of consideration of the Assessing Authority. It is not an immutable rule that an assessment order should contain reference and/or discussion on such query.
For the foregoing reasons, we are satisfied that, in the peculiar facts of the case, the impugned notice under section 14, of the Act, 1961 can be said to be based on a mere change of opinion. In view of the settled legal position that mere change of opinion does not furnish a justification for formation of reason to believe that income chargeable to tax has escaped assessment, we find the impugned action legally unsustainable.
Shri Sharma attempted to salvage the position by canvassing a submission that for the assessment year 2015-16, the Assessing Officer has rejected the petitioner’s contention as regards the employee cost and that constitutes a tangible material for reopening the assessment. We are afraid to accede to this submission. In our view, the aforesaid submission overlooks the fact that the Assessing Officer who passed the original assessment order for assessment year 2014-15 can be said to have been satisfied with the explanation furnished by the petitioner. Looking at the issue from a slightly different perspective, it can be said that the Assessing Officer could have called for the material and information, sought by the Assessing Officer who carried out the assessment for the year 2015-16, and yet would have formed the same opinion, different from the one formed by the Assessing Officer for the assessment year 2015-16. The issue, thus, squarely falls in the realm “change of opinion”. In our view, the only reason that in the succeeding assessment years, the Assessing Officer has come to a different opinion, by itself, may not be a ground to reopen the assessment for an earlier year, wherein a view was conclusively recorded by the concerned Assessing Officer.
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