Absence of new facts coming to knowledge in reassessment not to be done subsequent to original assessment proceedings
Fact and Issue of the case
The said writ petition was filed, challenging the order passed by the 1st respondent, dated 29.03.2018, under Section 148 of the Income Tax Act, 1961 (“the Act” for brevity), for the Assessment Year 2013-2014. The assessment for the year under consideration was completed by order, dated 31.12.2016, under Section 143(3) read with Section 92CA of the Act. Notice under Section 148 was issued on 29.03.2018, proposing to reopen the assessment. The assessee sought for the reasons for reopening, by letter dated 27.04.2018. The reasons were not furnished. However, notice under Section 143(2) of the Act, dated 21.08.2018, was issued. Therefore, the assessee sent another letter, dated 27.08.2018, requesting for furnishing the reasons for reopening. Ultimately, the reasons were furnished on 30.08.2018. The assessee submitted their objections, dated 12.09.2018, which were disposed of by the Assessing Officer, by order dated 16.10.2018, which was impugned in the writ petition.
Observation of the court
The assessee, in their objections, had also referred to the Circular issued by the Central Board of Direct Taxes, vide Circular No.549 dated 31.10.1989 , wherein, it was clarified that a mere change of opinion cannot constitute a reason to believe under Section 147 of the Act so as to justify the reopening of assessment.
Thus, in the absence of new facts coming to the knowledge of the Assessing Officer subsequent to the original assessment proceedings, the reopening could not have been done on the same materials. In fact, when we perused the reasons for reopening, it is evidently clear that all the materials have been culled out from the return of income filed by the assessee and the Annexure thereto. Thus, the impugned reassessment proceedings, having been done with the same set of facts which were available during the regular assessment, is to be held to be a clear case of change of opinion.
One other issue which the assessee had pointed out is with regard to the non-furnishing of reasons within reasonable time. In this regard, the assessee placed reliance on the decision of the High Court of Gujarat in the case of Sahkari Khand Udyog Mandal Limited v. Assistant Commissioner of Income Tax [370 ITR 107]. In the said decision, it had been pointed out that the Assessing Officer has to provide reasons recorded for initiating reopening proceedings within 30 days of the filing of the return of income by the taxpayer and without waiting for the taxpayer to demand such reasons. The Assessing Officer brushed aside the said decision, stating that the decision will not bind him as it is not a decision of the jurisdictional High Court.
As pointed out earlier, the notice under Section 148 of the Act was issued on 29.03.2018. The assessee within 30 days by their letter dated 27.04.2018 had sought for reasons for initiating the reopening proceedings. The Assessing Officer did not furnish the reasons nor responded to the said letter, but proceeded to issue the notice under Section 143(2) dated 21.08.2018. Therefore, the assessee submitted another letter dated 27.08.2018, requesting for furnishing the reasons for reopening. It is only thereafter, the reasons for reopening were furnished vide letter dated 30.08.2018. It is not clear as to why there was such a delay in furnishing the reasons. It may be true that no time limit has been prescribed for furnishing the reasons, but the Hon’ble Supreme Court, in the case of GKN Driveshafts (India) Limited v. Income-Tax Officer reported in (2003) 259 ITR 19 (SC), has held that the reasons shall be furnished within a reasonable time by the Assessing Officer, upon receiving the request for the same from the assessee. There is an enormous delay in furnishing the reasons for reopening and we are of the opinion that the reasons were not furnished to the assessee within a reasonable time. However, since we are fully convinced that the reopening proceedings is a clear case of change of opinion, we do not wish to render any finding on the legal issue as to what would be the reasonable time within which the assessee should be informed about the reasons for reopening, upon the request received from the assessee in that regard, and we leave the said legal issue open for consideration in an appropriate proceedings at the appropriate time.
In the result, the Writ Appeal is allowed and the order passed in the writ petition is set aside. Consequently, the writ petition is allowed and the reopening proceedings are quashed. No costs. Consequently, connected Miscellaneous Petitions are closed.
In the result the tribunal allowed the petition and ruled in favour of the assessee