Material available with the Assessing Officer during the course of original assessment – No reassessment permissible u/s 147

 

Bombay High Court in the case of Vodafone Idea Ltd. Vs ACIT [Appeal Number: WP No. 3560 of 2019, Order Dated 03/01/2022] has made an observation which has far reaching impact. It has observed as under:

1. The entire basis for proposing to reopen, as can be seen from the reasons, is on the documents and submissions which were available before the Assessing Officer, before passing of the original assessment order.

2. In fact, in the reasons, it is also recorded that the same issue was considered by the earlier Assessing Officer during the assessment proceedings.

3. The Assessing Officer notes that the assessee had made submissions on these items earlier but still states that income chargeable to tax has escaped because in his opinion certain amounts are required to be added back in profit and loss account and certain amounts should not have been disallowed.

4. Where on consideration of material on record, one view is conclusively taken by the Assessing Officer, it would not be open to reopen the assessment based on the very same material with a view to take another view.

   The court quoted the following:

   “We are satisfied that petitioner had truly and fully disclosed all material facts necessary for the purpose of assessment. Not only material facts were disclosed by petitioner truly and fully but they were carefully scrutinized and figures of income as well as deduction were reworked carefully by the Assessing Officer.

In the reasons for reopening, there is not even a whisper as to what was not disclosed.

In our view, this is not a case where the assessment is sought to be reopened on the reasonable belief that income had escaped assessment on account of failure of the assessee to disclose truly and fully all material facts that were necessary for computation of income but this is a case wherein the assessment is sought to be reopened on account of change of opinion of the Assessing Officer.

In a similar case where the notice to reopen the assessment was founded entirely on the assessment records and the entire basis for reopening the assessment was the disclosure which has been made by the assessee in the course of the assessment proceedings and where no material to which a reference was to be found, a Division Bench of this Court in 3i Infotech Limited V/s. Assistant Commissioner of Income Tax in paragraph 12 held as under:

12. The record before the Court, to which a reference has been made earlier, is clearly reflective of the position that during the course of the assessment proceedings the assessee had made a full and true disclosure of all material facts in relation to the assessment. As a matter of fact, it would be necessary to note that the notice to reopen the assessment on the first issue is founded entirely on the assessment records. There is no new material to which a reference is to be found and the entire basis for reopening the assessment is the disclosure which has been made by the assessee in the course of the assessment proceedings.

In Cartini India Limited V/s. Additional Commissioner of Income Tax [(2009) 314 ITR 275 (Bom.)], a Division Bench of this Court has observed that where on consideration of material on record, one view is conclusively taken by the Assessing Officer, it would not be open to the Assessing Officer to reopen the assessment based on the very same material with a view to take another view.

The principle which has been enunciated in Cartini must apply to the facts of a case such as the present. The assessee had during the course of the assessment proceedings made a complete disclosure of material facts. The Assessing Officer had called for a disclosure on which a specific disclosure on the issue in question was made.

In such a case, it cannot be postulated that the condition precedent to the reopening of an assessment beyond a period of four years has been fulfilled.

In the circumstances, petition is allowed.

The notice dated 2nd August 2019 and the order on objections dated 5th December 2019 are quashed and set aside.

Petition disposed with no order as to costs.