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In this case as found by the Commissioner of Income-tax (Appeals) the Assessing Officer in the course of assessment proceedings had called for the particulars regarding various items of income going into the computation of deduction under section 80HHC, for which the assessee had given the requisite details and particulars. Now the Assessing Officer has reopened the assessment to hold that the very same items of receipt has to be excluded in computing relief under section 80HHC. In other words, the Assessing Officer, on a reappraisal of the very same details, which was called for by him and furnished by the assessee, would like to come to a different conclusion. This clearly tantamounts to reopening is merely on a change of opinion.
The assessee had filed and furnished all details and particulars relating to the royalty payment including agreements, calculation and the approval before the Ld. AO during assessment proceedings. There was no failure on the part of the assessee to furnish true and correct all material facts. The facts were available before and were within the knowledge of the AO. The new AO as per the reasons recorded on the basis of the same facts, has observed that royalty payment should have been disallowed as it was capital in nature. This is a question of legal inference or interpretation which has been drawn from the same material facts on record. Therefore, the case falls in the category of change of opinion as at the time of original preceding the AO examined and gone into the question of royalty. Even if there was any legal error or illegality the same cannot be rectified and be made the subject matter of reassessment proceedings u/s 147/148 of the Act. The re-assessment order is also quashed.
When the statements made by the assessees here, later retracted, do not have any evidentiary value, there is no basis in holding that there are materials available before the Assessing Officer to make out cases of escapement of income. A reason must be formed by the Assessing Officer to reopen an assessment on the basis of material or information recognized under law.
On the date of issue of notice under section 148 on 31-3-2008 by the Assessing Officer for reopening of the assessment, the earlier view taken by the Assessing Officer in the assessment framed under section 143(3) on 31-3-2006 was supported by the decision of the Supreme Court in the case of HCL Comnet Systems & Services Ltd. (supra), and the decision of Delhi High Court in the case of CIT v. Eicher Ltd. [2006] 287 ITR 170.
There is no requirement in Section 147 or Section 148 or Section 149 that the reasons recorded should also accompany the notice issued under Section 148. The requirement in Section 149(1) is only that the notice under Section 148 shall be issued. There is no requirement that it should also be served on the assessee before the period of limitation
What is meant by the term change of opinion? (ii) Whether assessment proceedings can be validly reopened under Section 147 of the Act, even within four year, if an assessee has furnished full and true particulars at the time of original assessment with reference to income alleged to have escaped assessment and whether and when in such cases reopening is valid or invalid on the ground of change of opinion?
Section 147 – Sanction Of Superior Officer Renders Reopening Void: Bombay High Court. The notice under section 148 can be issued beyond four year with prior approval of joint commissioner and at the same time joint-commissioner should be satisfied that this is fit case for issue of a notice in view of section 151(2). In the present case no new evidence or fresh evidence produce by assessing officer and the joint-commissioner granted approval without see the record for issuance of notice under section 148. The court held that there was no compliance of the mandatory requirements of Section 147 and 151(2), the notice reopening the assessment cannot be sustained in law.
The validity of the notice reopening the assessment under Section 148 has to be determined on the basis of the reasons which are disclosed to the assessee. Those reasons constitute the foundation of the action initiated by the Assessing Officer of reopening the assessment. Those reasons cannot be supplemented or improved upon subsequently.
Assessee had disclosed full and true particular relating to claim of depreciation at time of original assessment then assessing officer has no jurisdiction to issue notice under section 148 of the Act, after the period of four year from the end of relevant assessment year. We, therefore, issue a writ of certiorari quashing the notice under Section 148 of the Act.
The existing provisions of section 153 and 153B, inter alia, provides the time limit for completion of assessment and reassessment of income by the Assessing Officer. Time limits have been provided for completion of assessment or reassessment under section 143(3), 147, 153A, 153C, etc. Further, these time limits get extended if a reference is made under section 92CA to the Transfer Pricing Officer during the course of assessment/reassessment proceedings. These time limits are either from the end of the financial year in which the notice for initiation of the proceedings was served or from the end of the assessment year to which the proceedings relate.
