Invalid notice under Section 148 of Income Tax Act quashed for lack of jurisdiction and legal basis.

The court found the notice issued under Section 148 of the Income Tax Act, 1961 to be without jurisdiction and bad in law. The reasons for reopening the assessment did not indicate any new material or evidence of non-disclosure by the assessee. The court held that the reopening based on alleged non-disclosure or concealment of material facts, change of opinion, and audit objection was not justified. Consequently, the court quashed the notice, ruling in favor of the petitioner.

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Issues Involved:
1. Jurisdiction and legality of notice issued under Section 148 of the Income Tax Act, 1961.
2. Alleged non-disclosure or concealment of material facts by the assessee.
3. Reopening of assessment based on change of opinion.
4. Reopening of assessment based on audit objection.

Analysis of Judgment:

1. Jurisdiction and Legality of Notice under Section 148:
The petitioner challenged the notice dated 03.12.2012 issued under Section 148 of the Income Tax Act, 1961 for the assessment year 2007-08, claiming it was issued without jurisdiction and was bad in law. The notice was issued after four years from the end of the assessment year, which requires the Assessing Officer (AO) to have reasons to believe that income chargeable to tax had escaped assessment due to the assessee's failure to disclose fully and truly all material facts necessary for the assessment. The court noted that the reasons recorded for reopening the assessment did not indicate any new material or evidence suggesting non-disclosure by the assessee. Hence, the notice was deemed without jurisdiction and bad in law.

2. Alleged Non-Disclosure or Concealment of Material Facts:
The AO claimed that the assessee had made incorrect claims under Sections 80JJA and 80IB of the Act, which led to the reopening of the assessment. The court observed that the assessee had disclosed all relevant facts during the original assessment proceedings, and the AO had accepted these claims after due consideration. There was no evidence of suppression or concealment of material facts by the assessee. Therefore, the court held that the reopening of the assessment was not justified on the grounds of non-disclosure or concealment.

3. Reopening of Assessment Based on Change of Opinion:
The court emphasized that reopening an assessment based on a mere change of opinion is not permissible under the law. The original assessment was completed after the AO had duly considered and accepted the claims under Sections 80JJA and 80IB. The court referred to the Supreme Court's decision in CIT v. Kelvinator of India Ltd., which held that the AO cannot reopen an assessment on a mere change of opinion. Consequently, the court found that the reopening of the assessment in this case was based on a change of opinion, which is not allowed.

4. Reopening of Assessment Based on Audit Objection:
The petitioner argued that the reopening was based on an audit objection, which is not permissible. The court noted that the information obtained under the Right to Information Act indicated that the assessment was reopened due to an audit objection. The court referred to the Supreme Court's decision in CIT v. Lucas T.V.S. Ltd., which held that reopening based on an audit objection is not valid. Therefore, the court concluded that the reopening of the assessment based on the audit objection was not permissible.

Conclusion:
The court held that the impugned notice dated 03.12.2012 issued under Section 148 of the Act was without jurisdiction, bad in law, and deserved to be quashed and set aside. The conditions stipulated under the first proviso to Section 147 were not satisfied, as there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. The court allowed the petition and quashed the impugned notice, making the rule absolute to the aforesaid extent. No order as to costs was made.

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