Parvindar Indar Singh Vs ACIT (ITAT Ahmedabad)
Reopening Beyond Four Years Quashed: Change of Opinion Cannot Justify Reassessment
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) quashed the reassessment proceedings initiated under section 147 beyond four years, holding that the reopening was based on a mere change of opinion and not on any failure by the assessee to disclose material facts. The assessee, a cardiologist following the cash system of accounting, had fully disclosed all particulars during the original scrutiny assessment completed under section 143(3).
The Tribunal noted that the difference between professional receipts as per Form 26AS and income offered in the return was fully reconciled and explained during the original assessment itself. The mismatch arose solely because the assessee followed cash basis, whereas the deductors followed mercantile basis, resulting in timing differences. Importantly, the Tribunal recorded that tax was paid on the entire professional income over the years, and there was no loss to the Revenue, as the assessee was consistently taxed at the maximum slab rate.
As regards the second reason for reopening—non-disallowance under section 14A—the Tribunal found that the assessee had sufficient interest-free funds, incurred no interest expenditure, and even the Assessing Officer, after reopening, made no 14A disallowance, thereby confirming absence of any escapement of income.
Relying on the jurisdictional Gujarat High Court decision in AIA Engineering Ltd. and the Supreme Court ruling in Kelvinator of India Ltd., the ITAT held that all material facts were already on record and the reopening was without new tangible material. Consequently, the reassessment was quashed and the addition of ₹86.26 lakh was deleted.
Since the reassessment itself was held void, the consequential rectification order under section 154 was also held to be without jurisdiction and was quashed. Both appeals of the assessee were allowed in full.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
