Court invalidates Income Tax Act Section 148 notices, citing impermissible change of opinion by Assessing Officer.

The court held that the notices under Section 148 of the Income Tax Act for reopening the assessment for AY 2006-07 were invalid as they amounted to a change of opinion by the Assessing Officer, which is impermissible. It was found that the depreciation on goodwill had been consistently allowed in previous assessments and was no longer debatable, leading to the conclusion that no income chargeable to tax had escaped assessment. Consequently, the court quashed the impugned notices and reassessment proceedings, declaring them invalid in favor of the petitioner in the Special Civil Application.

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Issues:
1. Validity of notice under Section 148 of the Income Tax Act for reopening assessment for AY 2006-07.
2. Jurisdiction of the Assessing Officer to disallow depreciation on goodwill.
3. Application of the principle of change of opinion in reassessment proceedings.
4. Interpretation of the law on depreciation of goodwill based on previous court decisions.

Analysis:
1. The petitioner sought to quash the notices under Section 148 of the Income Tax Act for reopening the assessment for AY 2006-07. The petitioner argued that the Assessing Officer had already considered and allowed the depreciation on goodwill during the scrutiny assessment under Section 143(3) of the IT Act. The court observed that the reopening was merely a change of opinion by the subsequent Assessing Officer, which is not permissible as per legal precedents. The court held that the impugned notice was not valid due to the Assessing Officer's prior consideration of the depreciation issue.

2. The petitioner contended that the Assessing Officer had allowed depreciation on goodwill since 1999 without any dispute. Additionally, in previous assessments, where the depreciation on goodwill was disallowed, the Tribunal had set aside the disallowance, indicating a consistent allowance of the depreciation. The court noted that the issue of depreciation on goodwill was no longer debatable based on relevant court decisions, and thus, no income chargeable to tax had escaped assessment. Consequently, the court found that the jurisdiction to disallow the depreciation on goodwill was not justified.

3. The court emphasized the principle that reassessment proceedings based solely on a change of opinion of the subsequent Assessing Officer are impermissible. It highlighted that the Assessing Officer had already allowed the depreciation on goodwill after considering the issue during the scrutiny assessment. The court further noted that the orders of the Tribunal, which set aside disallowances of depreciation on goodwill in previous assessments, had not been challenged. Therefore, the court concluded that the reassessment proceedings were not valid due to the application of the change of opinion principle.

4. Referring to the decisions of the Hon'ble Supreme Court and the Division Bench of the Court regarding the depreciation of goodwill, the court established that the issue was no longer res integra. The court cited specific cases where the Tribunal had overturned disallowances of depreciation on goodwill, indicating a settled legal position on the matter. Based on these legal precedents, the court determined that the impugned notice and reassessment proceedings should be quashed and set aside. As a result, the Special Civil Application succeeded, and the impugned notices were declared invalid, with the reassessment proceedings being quashed.

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