Court invalidates Income Tax reassessment for lack of new facts, deeming it impermissible based on change of opinion.

The court set aside the notice issued under section 148 of the Income Tax Act and the order rejecting objections, ruling that the reassessment was impermissible due to being based on a change of opinion rather than new material facts. The court emphasized that the Assessing Officer lacked proper reasons for the reassessment, leading to the petitioner's success in the case without costs being awarded.

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Issues Involved:
1. Legality of notice issued under section 148 of the Income Tax Act, 1961.
2. Validity of reopening assessment based on alleged non-disclosure of material facts.
3. Applicability of the "change of opinion" doctrine in reassessment proceedings.

Detailed Analysis:

1. Legality of Notice Issued Under Section 148 of the Income Tax Act, 1961:
The petitioner sought a writ of mandamus directing the respondent to withdraw and cancel the notice dated 18.11.2013 issued under section 148 of the Income Tax Act, 1961, and the order dated 4.2.2014 rejecting the objections of the petitioner. The petitioner argued that the Assessing Officer had no occasion to pass the impugned order and that all material facts had been fully disclosed during the original assessment proceedings, including details of long-term capital gains, trial run expenses, and bad debts. The petitioner contended that the notice under section 148 was a result of a change of opinion on the same set of facts, which is impermissible in law.

2. Validity of Reopening Assessment Based on Alleged Non-Disclosure of Material Facts:
The respondent argued that the notice did not arise from a change of opinion and that within a period of four years, it was permissible to reassess earlier orders if there was reason to believe that income had escaped assessment. The respondent relied on the decision in the case of Export Credit Guarantee Corporation of India Ltd. vs. Additional Commissioner of Income Tax, where it was held that within four years, the Assessing Officer could reopen the assessment if there was reason to believe that income had escaped assessment. The court examined the reasons adopted by the Assessing Officer for issuing the impugned notice, noting that the Assessing Officer contended that the petitioner had incorrectly set off unabsorbed depreciation and claimed deductions not in order, leading to underassessment of income.

3. Applicability of the "Change of Opinion" Doctrine in Reassessment Proceedings:
The court referred to the Supreme Court's decision in CIT vs. Kelvinator of India Ltd., which held that the words "reason to believe" must be interpreted in a manner that does not give arbitrary powers to the Assessing Officer to reopen assessments based on a mere change of opinion. The court found that the reasons recorded by the Assessing Officer did not demonstrate a failure on the part of the petitioner to disclose fully and truly all material facts necessary for assessment. The court noted that the Assessing Officer's reasons were contradictory and inconsistent, indicating that the necessary satisfaction in terms of the statutory provision had not been recorded. The court held that the reopening of the assessment was not justified as it was based on a change of opinion, which is impermissible.

Conclusion:
The court set aside the impugned notice dated 18.11.2013 issued under section 148 of the Income Tax Act, 1961, and the order dated 4.2.2015 rejecting the petitioner's objections. The court concluded that the decision to reopen the assessment was not based on proper reasons but was a result of a change of opinion, which is impermissible. The petition succeeded, and there was no order as to costs.

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