Ilesh J. Vora, J.
1. By filing this writ application under Article 226 of the Constitution of India, the writ applicant seeks to challenge the Notice dated 27.03.2019 issued by the respondent under Section 148 of the Income Tax Act, 1961 (for short "The Act, 1961") seeking to reopen the applicant's income tax assessment for the A.Y 2014-15.
2. The brief facts giving rise to filing of the present writ application are as follows:
2.1 The writ applicant - Rajena Agro Products Pvt. Ltd. is engaged in the activities of manufacturing of DOC & Caster Oil as well as trading of agricultural products.
2.2 The assessee company filed its return of income on 29.11.2014 for the relevant year A.Y. 2014-15 declaring its income at Rs.58,08,013/- and the same was processed under Section 143(1) of the Act.
2.3 The case of the assessee company for the year under consideration was selected for scrutiny assessment and various details were called for by issuing the notice dated 08.06.2016 under Section 142(1) of the Act and the same was complied with by the assessee. The respondent vide Notice dated 09.12.2016 issued under Section 142(1) of the Act called upon the assessee company to show cause as to why the amount of VAT payable Rs.78,79,941/- for the year 2013-14 should not be disallowed under Section 43 B of the Act, since it being a statutory liability had not paid before the due date of filing of the return. The assessee company vide letter dated 16.12.2016 had furnished its explanation. Despite of this, the revenue after considering various details furnished by the assessee company framed the assessment under Section 143(3) of the Act vide order dated 22.12.2016, whereby, the total income was determined at Rs.95,03,166/- and made certain additions to the return of income including the addition of Rs.10,41,320/- in respect of the VAT refund. The assessee company carried the assessment order in appeal before the Commissioner of Income Tax (Appeals) and the issue of addition of Rs.10,41,320/- made in respect of VAT refund was confirmed. Being aggrieved by the order of the CIT (Appeals), confirming the addition of Rs.10,41,320/-, the assessee had challenged the same before the Income Tax Appellate Tribunal and the Tribunal vide order dated 21.10.2019 deleted the amount of addition of Rs.10,41,320/-.
2.4 The revenue has issued the impugned Notice dated 27.03.2019 under Section 148 of the Act for reopening of the assessment for the year under consideration.
2.5 Pursuant to the notice dated 27.03.2019, the assessee company filed its return of income and requested the respondent to supply the reasons for reopening, which has been provided by email dated 05.07.2019. The reasons recorded reads thus :
Reasons for reopening :-
"Reasons for reopening of the assessment in the case of M/s. Rajena Agro Products Pvt. Ltd. AY. 2014-15 u/s. 147 of the I.T.Act.
1. Brief Details of the Assessee:-
In this case, the assessee has filed her Return of Income for A.Y, 2014-15 on 29.11.2014 declaring total income of Rs.58,08,013/-. The assessment u/s. 143(3) was finalized on 22.09.2016 by assessing total income of Rs. 95,03,166/-.
2. Brief details of information collected /received b the AO:
On verification of the details submitted by the assessee it is seen that the assessee has received a VAT refund of Rs. 79,78,941/- during the year, and same is being reflected in the bank statement also. However, the assessee has not declared the same while filing the return of income. Thus, the entire amount of Rs. 79,78,941/- was liable for taxation and was required to be added to the total income of the assessee,
3. Analysis of information collected /received :
The requirement to initiate proceedings u/s. 147 of the Act are reason to believe that income for the year under consideration has escaped because of faihire on part of the assessee to disclose fully and truly all material facts necessary for its assessment for the assessment year under consideration. It is pertinent to mention here that reason to believe that income has escaped assessment for the year under consideration have been recorded above in paragraph have carefully considered that assessment records containing the submissions made by the assessee in response to various notices issued during the assessment proceedings and have noted that the assessee has not fully and truly disclosed the material facts necessary for its assessment for the year under consideration.
4. Enquiries made by the AO as sequel to information collected/received:
The copy of balance-sheet, profit and loss a/c and submission received the assessee has filed its return of income on 22.12.2016 are available in assessment records. The information received is processed and examined from the assessment records and material available on record with the department.
5. Finding of the AO :
On verification of the bank statement it is seen that the assessee company has received VAT refund of Rs.79,78,941/- during the year. The assessee has already availed the deduction in the form of purchase which includes VAT expenses. As such the entire amount of Rs. 79,78,941/- liable for tax when it has escaped from the assessed income.
6. Basis of forming reason to believe and details of escapement of income:-
The assessee had received a sum of Rs. 79,78,941/- as VAT refund, and Same is being reflected in the bank statement. However, the assessee has failed to disclosed such VAT refund of Rs.79,78,941/in his return of income. This has resulted into under assessment of income of Rs.79,78,941/-. Therefore, I have reason to believe that the income to the tune of Rs.79,78,941/- has been escaped from the assessment.
8. Applicability of the provisions of section 147 151 to the facts of the case:
In this case, as stated in Para 5 that the assessee had received a sum of Rs. 79,78,941/as VAT refund, but in absence of the details that, when entire amount of Rs.79,78,941/- has been received and same is being reflected in the bank statement. This has resulted into under assessment of income of Rs.79,78,941/-. Therefore I have reason to believe that the income to the tune of Rs.79,78,941/has been escaped from the assessment. Accordingly, in this the only requirement to initiate proceedings u/s. 147 is reason to believe which has been recorded in Para 6.
Income chargeable to tax has been escaped by an amount of Rs.79,78,941/-
In view of the above, I have reason to believe that the income to the above extent i.e. Rs.79,78,941/- which is chargeable to tax has escaped assessment for the previous year relevant to A.Y. 2014-15 within the meaning of clause (c) of section 151 of the Act."
2.6 The writ applicant filed its objections vide its communication dated 09.07.2019 and the same came to be rejected by the Revenue vide order dated 24.10.2019.
3. Being dissatisfied with the decision of reopening the assessment, the writ applicant has come up before this Court with the present writ application.
4. The case of the revenue for reopening of the assessment mainly on the ground that, the assessee has received VAT refund of Rs.79,78,941/- during the year under consideration and the same was not declared while filing of the return of income.
5. The assessee had raised the objections against reopening, inter alia, stating that, the issue of VAT refund received has already examined in the assessment order passed under Section 143(3) of the Act and the order is challenged before the competent authority, therefore, in this circumstances, fresh assessment by reviewing the materials already examined, which were available on the assessment record by the Assessing Officer due to change of opinion is not permissible.
6. We have heard Mr. Tushar Hemani, the learned Senior Counsel assisted by Ms. Vaibhavi K. Parikh, the learned counsel appearing for the writ applicant and Mrs. Mauna M. Bhatt, the learned Senior Standing Counsel assisted by Mr. Karan Sangani, the learned counsel appearing for the Revenue.
7. Learned counsel appearing for the writ applicant has submitted the following contentions:-
(i) It was submitted that, the impugned notice is illegal, bad in law, barred by limitation and without jurisdiction and therefore, the same deserves to be quashed and set aside;
(ii) It was pointed out that, mere a change of opinion is not sufficient to reopen any completed assessment. He further submitted that, the assessing officer cannot take any action under Section 147 of the Act merely because of the fact that, the assessing officer has change of opinion on the same set of facts. In this regard, it was submitted that, the case of the assessee company was selected for scrutiny and the issue of the VAT amount was examined at the stage of original assessment by the then assessing officer and the differential amount of Rs.10,41,320/- (Rs.79,78,941/- minus Rs.69,37,621/- = Rs.10,41,320/-) was added as income being an excess refund received by the assessee company and consciously not to choose the entire sum of VAT refund received during the year under consideration. Under the circumstances, the learned counsel submitted that, the reassessment is totally unwarranted, invalid, bad and illegal in the eye of law.
8. In view of the aforesaid contentions, the learned counsel appearing for the writ applicant submits that, the impugned notice is bad, illegal, contrary to law and is required to be quashed and set aside.
9. On the other hand, the writ application has been vehemently opposed by Mrs. Mauna Bhatt, the learned Sr. Standing Counsel appearing for the Revenue. Mrs. Bhatt has submitted that, the revenue is justified in reopening the assessment for the year under consideration as the assessee company failed to disclose the amount of VAT while filing the return of income, which resulted into under assessment of income for which the assessing officer has reason to believe that, the income to the tune of Rs.79,78,941/- has escaped assessment.
10. In view of the contentions raised by the Revenue, Mrs. Bhatt, prays that, there being no merits in the writ application, the same may be rejected.
11. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the revenue is justified in reopening the assessment for the year A.Y. 2014-15 ?
12. It appears from the record that, after filing of the return for the year under consideration, the case was selected for scrutiny and the notice under Section 143(1)(3) of the Act was issued and certain details and information were called for to substantiate the claim made in the return of income and the same was complied with by the assessee and after considering the various details as well as the explanation furnished by the assessee, the revenue had framed the assessment under section 143(3) of the Act vide order dated 22.12.2016, whereby, the total income was determined at Rs.95,03,166/- after making certain additions to the return of income including the addition of Rs.10,41,320/- in respect of VAT refund. During the course of assessment proceedings, the details of VAT returns and VAT refund of Rs.79,78,941/- were called for and the Revenue had partially accepted the explanation submitted by the Revenue and had made addition of Rs.10,41,320/- (addition for VAT refund received Rs.79,78,941/- minus Rs.69,37,061/-) towards the VAT refund receivable adjusted erroneously in the assessment order.
13. It is a settled principle of law that, a mere fresh application of mind to the same set of facts or mere a change of opinion does not confer jurisdiction upon the Assessing Officer to issue notice under Section 148 of the Act.
14. In the case of CIT Vs. Kelvinator of India Ltd., the expression "change of opinion" has been interpreted and held that, the reopening of the assessment on the basis of "mere a change of opinion" cannot be per say reason to open. The relevant paras 5, 6 & 7 reads thus:
"5......where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to re- open the assessment. Therefore, post-1st April, 1989, power to re-open is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be per se reason to reopen.
6. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has no power to review; he has the power to re-assess. But re-assessment has to be based on fulfillment of certain pre-condition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place.
7. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to re-open, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief."
15. A careful analysis of the judgment of the Apex Court, it is settled that, mere a fresh application of mind to the same set of facts or mere a change of opinion does not confer jurisdiction to issue Notice under Section 148 of the Act. In light of the above law, we shall now deal with the facts of the present case.
16. It is an undisputed fact that, the issue of the amount of Rs.79,78,941/- under the VAT received during the year under consideration was examined during the course of the scrutiny assessment as item no.3 of the assessment order dated 22.12.2016. During the course of the scrutiny assessment, various details were called for by the revenue and accordingly, the assessee company had furnished the necessary primary materials pertaining to the TDS and VAT refund. It appears from the record that, the assessee company had responded to the show-cause notice by written explanation along with the necessary balance-sheet, bank statement and other relevant materials. It is also an undisputed fact that, the then assessing officer had framed the assessment vide order dated 22.12.2016, whereby, the total income was determined at Rs.95,03,166/- and made certain additions including the addition of Rs.10,41,320/- in respect of the VAT refund and the same was deleted by the Income Tax Appellate Tribunal vide order dated 21.10.2019.
17. In the background of the aforesaid facts, we have examined all the material facts as well as the reasons recorded for reopening of the assessment for the year under consideration. We are of the opinion that, the impugned action on the part of the respondent to issue Notice under Section 148 of the Act is without authority of law and therefore, the same is required to be quashed and set aside for the following reasons:-
(i) The issue of VAT amount thoroughly examined at the stage of the original assessment by the then assessing officer and had considered various details and consciously, he arrived at a conclusion not to make an addition in respect of the entire amount of Rs.79,78,941/- and add only differential amount of Rs.10,41,320/- and the same was deleted by the Income Tax Appellate Tribunal vide order dated 21.10.2019. A perusal of the reasons recor
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ded, it reveals that, the assessment is sought to be reopened mainly on the ground that, "the assessee was failed to disclose the VAT refund of Rs.79,78,941/- in his return of income which has resulted into under assessment of income". Considering the scrutiny assessment order, it appears that, the assessee had disclosed fully and truly all primary material facts with regard to VAT amount and accordingly, the then assessing officer had framed the assessment. In this circumstances, when there was no any failure on the part of the assessee to disclose fully and truly material facts for the purpose of relevant assessment, now it is not open to change that opinion on the very same set of facts which were available at the time of original assessment. Therefore, in the present case, the reasons recorded by the assessing officer led to belief about the escapement of assessment is nothing, but mere a change of opinion, which cannot sustainable in law. (ii) It is not the case of the revenue that, subsequently i.e. after the order of scrutiny assessment, the assessing officer has received "tangible material" to come to the conclusion that, there is escapement of income. We have also examined the aspect whether any tangible material exists or not. We do not find any tangible material in the hands of the assessing officer to form a prima facie opinion that, the income has escaped assessment. Therefore, in the present case, in the absence of element of non-disclosure of relevant materials fully and truly necessary for assessment, the assessing officer has no right to reopen the assessment. 18. For the foregoing reasons, the writ application succeeds and is hereby allowed. The impugned notice dated 27.03.2019 is hereby quashed and set aside.