Reopening of assessment without any fresh tangible material unsustainable

Nainudevi A. Prajapati Vs ITO (ITAT Ahmedabad)

ITAT Ahmedabad held that reopening of assessment under section 147 of the Income Tax Act initiated on a mere change of opinion without any fresh tangible material unsustainable in law.

Facts- The assessee filed return of income u/s. 139(1) of the Act declaring total income of ₹ 4,50,177/-. The case was selected for scrutiny and assessment order u/s. 143(3) of the Act was passed on 30-12-2011, determining the total income at ₹ 10,39,054/-. After the assessment, it was discovered by the assessing officer that while estimating the income of the assessee, the then assessing officer had failed to add the sundry creditors of ₹ 1,63,03,871/- to the total income of the assessee, even though, the assessee had failed to furnish details and evidence of their genuineness. Therefore, the assessing officer had reason to believe that income to the tune of ₹ 1,63,03,871/- had escaped assessment and the case was reopened u/s. 147 of the Act. The assessee failed to furnish the return of income in response to notice u/s. 148 of the Act. Assessment u/s. 143 (3) r.w.s 147 of the Act was completed on 31-03-2014, determining total income at ₹ 1,77,91,657/- after addition of sundry creditors of ₹ 1,63,03,871/-. Aggrieved by the assessment order, the assessee preferred appeal before CIT (Appeals), who dismissed the appeal of the assessee.

Conclusion- In absence of any such fresh tangible material, the re-opening cannot be resorted to since the same would amount to “mere change of opinion”. Further, the Supreme Court held that “mere change of opinion” cannot be per se “reason to reopen” the assessment proceedings which have already been concluded.

Held that in the instant facts the re-assessment proceedings have been initiated on a “mere change of opinion” and hence the same are not liable to be sustained. Accordingly, we direct, that the re-assessment order having been passed on “mere change of opinion” is liable to be quashed.

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