Hon’ble Delhi HC grants interim relief against Income Tax Reassessment proceedings on the ground of “mere change of opinion.”

In a recent order dated 25.03.2021, the Hon’ble Delhi High Court granted an interim relief to the petitioner, against the reassessment proceedings initiated under Section 147/148, on the ground of “mere change of opinion”.

Brief Facts of the Case

The Petitioner in the present case had claimed the deduction of Rs. 61.08 Crores on account of interest expense while computing the income under the special provision of the Income Tax Act. This claim has duly been reflected in ITR, Form 29B, Computation of Income, and Auditors Report. The ITR for the AY 2015-16 was filed by the Petitioner at the loss of Rs. 44 Crores. During the framing of the assessment, the officer, after making certain addition/disallowance assessed the petitioner’s income at the loss of Rs. 42.2 Crores.

Thereafter, the AO initiated the reassessment proceedings under Section 147/148 on reason that Rs. 61.08 Crores should not have been deducted while computing the income under the special provision of the act.

Petitioner’s Contention

Mr. Puneet Agrawal contended that the information on which the reassessment proceedings have been initiated were available to the AO  in the computation appended to the return and the auditor’s report as well as in Form – 29B. Therefore, once the AO has assessed the Petitioner after making certain addition/disallowance, then he cannot reopen the assessment on the ground that the income has escaped assessment and the said amount should not have been claimed as deduction, as it amounts to change of opinion.

Hon’ble Court’s Order

The Hon’ble Court analyzed the documents on record and noted that the impugned notice has been issued on the information already available to the AO in the computation appended to the return and the auditor’s report as well as in Form – 29B. The Court noted that the matter require examination, therefore, the Hon’ble Court granted an interim relief to the Petitioner, wherein it has been ordered that the (if) assessment proceedings may go on and an assessment order is passed, it shall not be given effect to till the further orders of the Hon’ble Court.

Author’s Comment

Time and again, the Hon’ble High Court of Delhi has been ruling that the AO has the power to reopen the assessment under Section 147/148 of the IT Act, but it does not have the power to review the already concluded assessment on the basis of mere change of opinion. The Authorities cannot review the assessment in the garb of reopening of the assessment under Section 147/148 as it would amount to the harassment of the assessee. Reference in this regard is invited to the judgement of Hon’ble Delhi High Court in the case of CIT v. Kelvinator of India Ltd. (2002) 256 ITR 1, affirmed by Apex Court in the case of CIT v. Kelvinator of India Ltd. (2010) 2 SCC 723.

However, despite the already settled law, the authorities often issue reassessment notices reviewing the assessment, in the garb of re-opening of the assessment proceedings under Section 147/148.

The present order is an addition to the already laid down law.

The matter has been argued by Puneet Agrawal, Adv. and Yuvraj Singh Adv.

Read the order at _W.P.(C)_3992!2021_2021_03_25.pdf

Yuvraj is an advocate and has completed his B.A. LL.B(Hons) from RGNUL-Punjab. He is a practicing advocate and has been involved in matters pertaining to GST and other indirect taxes as well as Direct Tax. He is active in Writ Courts and has involvement in a few landmark judgments like Pitambra Books Pvt. Ltd. V. Union of India (W.P.C. No. 627 of 2020), and represented Sales Tax Bar Association (Delhi) to resolve GST issues and glitches.

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