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Facts
The assessee, Rane Steering Systems Pvt. Ltd., filed its income tax return for AY 2015-16. The Assessing Officer (AO) reopened the assessment beyond four years, disallowing certain expenses claimed as revenue expenditure, treating them as capital in nature. The Commissioner of Income Tax (Appeals) (CIT(A)) upheld the AO's disallowance.
Held
The Tribunal noted that the reopening was done beyond four years, and the reasons for reopening were based on information already available during the original assessment, suggesting a change of opinion. The CIT(A) had not adjudicated the legal ground regarding change of opinion and dismissed the appeal on merits due to lack of documentation.
Key Issues
Whether the reassessment proceedings initiated beyond four years are valid, especially when based on a change of opinion and not on failure of the assessee to disclose material facts?
Sections Cited
147, 143(3)
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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: MS. PADMAVATHY.S & SHRI MANU KUMAR GIRI
आदेश / O R D E R
PER PADMAVATHY.S, A.M: This appeal by the assessee is against the order of the Commissioner of This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, (in short "CIT(A)") passed u/s. 250 of the Income Tax Act, 1961 (in short "the Act") dated 08.09.2025 for Assessment Year (AY) 2015-16.
The assessee is a group company of Rane Group and filed the return of income for AY 2015-16 on 30.11.2015 declaring total income of Rs. 43,28,89,900/. The case was selected for scrutiny and the assessment order u/s. 143(3) of the Act was passed accepting the income returned. The A.O reopened the assessment by issue of notice u/s. 148 of the Act on 30.03.2021 for the reason that the expenses claimed by the assessee in the profit and loss account towards trademark fees, royalty, information system are capital in nature and cannot be claimed as revenue expenditure. The assessee in response filed the return of income and other details called for by the A.O. After considering the various details filed by the assessee, the A.O disallowed the royalty fee and expenses towards information system and assessed the income at Rs. 53,97,18,565/-. Aggrieved, the assessee filed further appeal before the CIT(A), who confirmed the disallowances made by the A.O.
The Ld. Authorized Representative (AR) of the assessee submitted that the assessee's case reopening was made beyond four years and therefore the proviso to Section 147 of the Act is applicable. The Ld. AR in this regard drew our attention to the reasons recorded (page 5 of paper book) is submitted that the reasons are based on the expenses claimed by the assessee in the profit and loss account and therefore, there is no failure on the part of the assessee to disclose any information where the assessment is completed u/s. 143(3) of the Act. The Ld. AR further submitted that the assessee had raised the said legal contentions before the CIT(A) stating that all the information were available before the A.O during the original assessment and reopening based on the same set of information would amount of change of opinion which is invalid. The Ld. AR also submitted that the CIT(A) while dismissing the appeal has inadvertently considered the said ground as a general ground Rane Steering Systems Pvt. Ltd. :- 3 -:
not requiring separate adjudication. The Ld. AR on merits submitted that the CIT(A) has confirmed the addition stating that the assessee has not provided ledger, confirmation, etc. with regard to the impugned addition. The Ld. AR in this regard submitted a paper book of 66 pages as additional evidence and prayed for the admission of the same. Accordingly, the Ld. AR prayed that the appeal may be remitted back to CIT(A) with a direction to adjudicate the legal ground and also to decide on merits based on the additional evidences now submitted.
The Ld. Departmental Representative (DR), on the other hand, argued that the assessee had ample opportunities to submit the details before the lower authorities and that the assessee failed to do so. Accordingly, the Ld. DR supported the orders of the lower authorities. On the issue of legal ground not adjudicated by the CIT(A), the Ld. DR fairly conceded that the impugned issue may be remitted back to the CIT(A).
We have heard the parties, and perused the material available on record. In assessee's case the assessment for A.Y 2015-16 is reopened on 30.03.2021 i.e.beyond four years and therefore, the proviso to section 147 of the Act which reads as under is applicable to assessee's case: “Income escaping assessment. 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or re-compute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) :
Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: *****
It is a settled legal position that in case reopening cannot be made where the assessment is reopened beyond four years in cases where the original assessment was completed u/s. 143(3) of the Act unless the assessee has failed to disclose information during the course of assessment. From the perusal of the reasons recorded, we notice that the A.O has reopened the assessment for the reason that certain expenses which are capital in nature have been allowed as deduction during the course of original assessment. Accordingly, we see merit in the submissions of the Ld. AR that the reopening is based on the same information which is already available on record and not for the reason that there has been a failure on the part of the assessee. Further from the perusal of order of the CIT(A), we notice that through ground No.4 (page 2 of CIT(A) order) the assessee has raised the legal contention that the reopening based on change of opinion which is not adjudicated by the CIT(A) stating that it is general in nature not warranting separate adjudication (page 3 to CIT(A) order). We further notice that on merits the CIT(A) has dismissed the appeal on the ground that certain information pertaining to the impugned additions have not been filed by the assessee. Considering the above facts and the additional evidences now submitted by the assessee, we are of the considered view that the impugned issue has to be examined afresh on merits as well as the legal contentions of Rane Steering Systems Pvt. Ltd. :- 5 -:
the assessee need to be adjudicated. Therefore, we remit the appeal back to the CIT(A) with a direction to adjudicate the legal contention of the assessee and also to consider the merits of the issue based on documentary evidences and decide in accordance with law.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced on 04th day of March, 2026 at Chennai.