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To successfully manage reopening it is desirable for AO to meet the following four broad parameters :
  1. the conditions stipulated in the provisos to section 147 of the Act have to be fulfilled;
  2. It is to be demonstrated that the taxpayer has failed to fully and truly disclose all material information in the return or at the first instance during the scrutiny case proceedings, as is the case;
  3. The reopening should not be a case instance of change of opinion assuming an earlier scrutiny assessment;
  4. The AO should bring forth any new tangible material to justify the reopening.
Importantly each test is relevant and to be met with.
The Madras High Court in[2021] 437 ITR 687 (Mad) encountered a case in which the AO initiated reassessment after four years of completing scrutiny and yet made out his reasons as original return facts without anything else.
The High Court order reads “it is evidently clear that the Assessing Officer did not have any new tangible material for reopening the proceedings, as the reason is prefaced by the sentence “In the return of income filed for the assessment year 2011-12, the assessee has debited a certain amount”.
The reassessment therefore failed not only for the reason of change of opinion but also on the reason that the AO has not brought on record any new tangible material to reopen the assessment.
Though in this case the reopening has been done beyond the period of four years but the principle should hold good even in a scenario where the assessment is otherwise completed summarily u/s143(1).
This judgement lends a new ground of appeal in the hands of the taxpayer to agitate reopening a summary assessment case.
Thanks 🙏 for a read.
CA Gopal Nathani

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