Court Invalidates Reassessment Based on Change of Opinion, Quashes Notice

The court held that the reopening of the assessment under section 147 was not valid as it was based on a change of opinion rather than new material facts. The court quashed the notice issued under section 148 of the Income-tax Act, 1961, and the preliminary order. The petition was allowed with no order as to costs.

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Issues Involved:
1. Legality of the notice issued under section 148 of the Income-tax Act, 1961.
2. Validity of reopening the assessment after four years.
3. Alleged failure to disclose fully and truly all material facts by the petitioner.

Detailed Analysis:

1. Legality of the notice issued under section 148 of the Income-tax Act, 1961:
The petitioner challenged the notice dated October 28, 2009, issued by the respondent-Assessing Officer under section 148 of the Income-tax Act, 1961, seeking to reopen the assessment for the year 2004-05. The petitioner argued that the issues pertaining to section 115JB and deduction under section 80HHC were thoroughly processed during the original scrutiny assessment under section 143(3). The petitioner contended that the reasons recorded for issuance of the notice indicated a mere change of opinion on the same issues, which is not permissible under the law.

2. Validity of reopening the assessment after four years:
The court noted that the notice under section 148 was issued beyond the period of four years from the end of the relevant assessment year. According to the proviso to section 147, the Assessing Officer can only take action if any income chargeable to tax has escaped assessment due to the failure of the assessee to file a return or disclose fully and truly all material facts necessary for the assessment. The court found that it was not the case of the Revenue that there was any failure on the part of the petitioner to make a return under section 139 or respond to notices under section 142 or section 148. The court emphasized that the reasons recorded for reopening the assessment did not reflect any failure by the petitioner to disclose fully and truly all material facts necessary for the assessment.

3. Alleged failure to disclose fully and truly all material facts by the petitioner:
The court observed that the duty cast upon the assessee is to make a true and full disclosure of the primary facts at the time of the original assessment. The court referred to the reasons recorded for reopening the assessment, which stated that the income had escaped assessment. However, the reasons did not indicate any failure on the part of the petitioner to disclose fully and truly all material facts. The court found that the respondent's case was based on the assertion that the original assessment did not examine certain issues from the desired angle, which amounted to a change of opinion rather than new material facts. The court held that the reopening of the assessment was not justified as it was based on the same set of facts and constituted a change of opinion.

Conclusion:
The court concluded that the reopening of the assessment under section 147 was not valid as it was based on a change of opinion and not on any new material facts. The court quashed and set aside the impugned notice dated October 28, 2009, under section 148 of the Income-tax Act, 1961, as well as the preliminary order dated March 5, 2010. The court allowed the petition with no order as to costs.

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