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SUPREME COURT OF INDIA
M.R. Shah, B.V. Nagarathna, JJ.
The Deputy/Assistant Commissioner Of Income Tax - Petitioner
Vs.
M/s Financial Software And Systems Private Ltd. - Respondent
Petition for Special Leave to Appeal (C) No. 11574 Of 2022
Decided On : 22-07-2022
| Table of Content |
|---|
| 1. reassessment set aside due to change of opinion (Para 1) |
| 2. pending applications disposed of (Para 2) |
ORDER :
1. The re-opening of the assessment has been set aside by the High Court by specifically observing that the reassessment proceedings were on change of opinion and after taking into consideration the fact that at the time of original assessment under Section 143 of the Income-tax Act, 1961, specific queries were raised which were answered by the Assessee and, therefore, thereafter it was not open for the Revenue to re-open the assessment proceedings on the same ground and thereafter when the re-assessment proceedings have been set aside, it cannot be said that the High Court has committed any error. The Special Leave Petition stands dismissed.
2. Pending application(s) shall stand disposed of.
Re-opening of assessment is invalid if it constitutes a mere change of opinion without new findings or evidence.
The court affirmed that reopening of assessment under Section 148 is valid if the Assessing Officer has reason to believe that income has escaped assessment, based on credible information.
Section 147 enables the Assessing Officer to assess or reassess any income chargeable to tax which he has reason to believe has escaped assessment for an assessment year.
Reopening of assessments under Section 147 requires tangible evidence of income escapement, not just a change of opinion.
The power to reopen assessments under Section 147 of the IT Act is much wider post-1st April, 1989, but must be based on tangible material and have a live link with the formation of belief.
Reopening of assessment beyond four years without fresh tangible material or proper disposal of objections is illegal under the Income Tax Act.
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