No question of Change in Opinion when subject matter income not shown in original return

No question of change of opinion when subject matter income not shown in original return or was not the subject of earlier reopening. High Court upheld double reopening

ABCAUS Case Law Citation:
ABCAUS 2563 (2018) (10) HC

Important Case Laws Cited/relied upon by the parties:
Commissioner of Income Tax vs. Kelvinator of India Ltd. 5. (2010) 320 ITR 0561
Fenner (India Ltd. vs. Deputy Commissioner of Income Tax (2000)241 ITR 0672
Commissioner of Income Tax vs. Elgi Ultra Industries Ltd. (2008) 296 ITR 0573
Thiagarajar Mills (P) Ltd. vs. Deputy Commissioner of Income Tax 2009 317 ITR 0066  

The assessee had filed a Writ Petition praying for quashing of the order passed by the Assessing Officer (AO) rejecting the objections raised by the petitioner against reopening of the assessment,  and direction to be issued to the AO to drop the reassessment proceedings.

The return of the assessee was processed under Section 143(1) of the Income Tax Act (the Act). Subsequently, in the first round of reopening, the case was reopened by issuing a notice under Section 148 on the issue of cash deposits made by the assessee.

The assessee intimated that the original return filed to be treated as the one filed in response to the notice under Section 148 of the Act. The assessee filed copies of Bank Statements. The Assessing Officer completed the reassessment under section 143(3) read with section 147 by adding the short fall in cash withdrawal as unexplained income.

Five years later, the case was once again reopened by issuing notice under section 148. The assessee filed a reply to treat the original return as the one filed in response to the notice and also requested to furnish the reasons for reopening the assessment.

The AO supplied the reasons according to which, during the relevant financial year, the deceased husband of the assessee had paid a sum of Rs.2.75 crores to a person for purchase of property through his bank account and that sources for such advance was require to be verified.

The assessee filed her objections to reopen the assessment by stating that during the course of the first reassessment proceedings, copies of bank statements, receipts and payments account were produced including the sources of all deposits made and that the assessment was completed after due verification of all receipts and payments and the sources and therefore, the proposal to reopen to re-verify the source of advance given amounted to change of opinion.

It was also informed that there was no material available to conclude that the income has escaped assessment for issuing notice under section 148. It was also submitted that there had been full and true disclosure of all material facts. However, the AO through the impugned proceedings rejected the objection.

The contention of the Revenue, by referring to the original return, was that the assessee had failed to disclose fully and truly all material facts necessary for its assessment.

The assessee contended that the return of income tax filed in Form No.1 and 2 does not contain in production for disclosure of advances given and it contains only the income tax returned. However, during the first re-assessment proceedings, the petitioner had furnished the entire bank account along with details of all receipts and payments wherein the advance made was also mentioned. Therefore, there was no failure on the part of the assessee to disclose the advance made during the re-assessment proceedings.

The Hon’ble High Court observed that when the earlier reopening proceedings was initiated with issuance of notice under section 148, the assessee did not file a fresh return by disclosing the subject matter income and on the other hand, she made a request to treat the return already filed as the one filed in response to the said notice. Therefore, it was evident that the original return filed by the assessee, which was sought to be treated as that of the return filed in response to the notice under section 148, was in tact and did not disclose truly and fully the material facts, more particularly, in respect of the subject matter transaction.

The Hon’ble High Court opined that therefore, the said transaction which came to the notice of the Assessing Officer, while reopening the assessment earlier, was certainly, a tangible material, based on which, the present reopening under section 147, can be resorted to. Admittedly, this material was not existing at the time of original assessment.

Regarding the contention that the said material was placed before the Assessing Officer during the earlier reassessment proceedings and he had not taken note of the same, the Hon’ble High Court pointed out that the earlier reopening of the assessment was based on some other issue and therefore, the assessee was not justified in contending that no new material was available before the AO for the present reopening.

The Hon’ble High Court stated that providing certain materials during the earlier reopening proceedings, cannot be equated with the disclosure of true and full material facts necessary for the assessment, unless such material was already placed on record at the time of filing the original return itself. Therefore, whatever the materials filed during the reassessment proceedings relatable to a particular issue, cannot be considered as the true and full disclosure, unless such material is having any connection with the issue for which such reopening was done. On the other hand, such material, not relatable to the issue for the earlier reopening proceedings, will only take the shape of a new and tangible material before the Assessing Officer to reopen the assessment once again.

The Hon’ble High Court clarified that there was no question of change of opinion as admittedly, the subject matter income was never shown in the original return and therefore, it cannot be said that the Assessing Officer has taken a different opinion now on the said income.

The Writ Petition was dismissed

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