By TIOL News Service

CHENNAI, JAN 07, 2019: THE ISSUE BEFORE THE DIVISION BENCH IS - Whether completion of scrutiny assessment will prevent the AO from initiating reopening, when assessee has accepted non disclosure of certain income during scrutiny and hence, same was not taken into consideration during scrutiny. NO IS THE VERDICT.

Facts of the case:

The assessee company had filed its return for the relevant assessment year. Thereupon, after conducting a survey, the assessment was completed accepting the returned income. However, long after that, the reopening notices u/s 148 came to be issued seperately, by relying upon a statement recorded from the Managing Director of the assessee during the survey proceedings. On appeal, both the CIT(A) as well as the ITAT, upheld the validity of reopening notice. The assessee had therefore approached this Court, contending that the reopening was a clear case of change of opinion and that there was no allegation that the assessee had failed to fully and truly disclose all the details.

High Court held,

++ in the considered view of this Court, the CIT(A) as well as the Tribunal rightly appreciated the factual position and noted that the scrutiny assessment was taken up since the survey u/s 133A was conducted and that during such scrutiny assessment, the statement recorded from the Managing Director of the assessee was not taken into consideration by the AO. Therefore, there was no opinion formed by AO on the said issue under the head of income. Further, the assessee themselves accepted that the income was earned, but not disclosed in the returns. Accordingly, the reopening was confirmed;

++ with regard to the contention of the assessee that there was a full and true disclosure by the assessee, on facts, it is found that in the instant case, the reopening has been done based on the statement given by the Managing Director of the assessee during the survey. It is not the record of assessee that they disclosed it in the returns. Hence, on facts, the AO, the CIT(A) and the Tribunal clearly held that the reopening was not a change of opinion.

(See 2019-TIOL-50-HC-MAD-IT)