Court invalidates reassessment for change of opinion under section 148 of Income Tax Act. Petition allowed.

The court held that the reopening of the assessment based on a mere change of opinion lacked validity. The notice issued under section 148 of the Income Tax Act was quashed and set aside. The petition was allowed with no order as to costs.

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Issues Involved:
1. Validity of the notice issued under section 148 of the Income Tax Act, 1961 for reopening the assessment.
2. Whether the reopening of assessment is based on a mere change of opinion.
3. Applicability of section 170(i) of the Income Tax Act regarding the assessment of income up to the date of succession.
4. Whether the income alleged to have escaped assessment was already taxed in the hands of the successor company.

Detailed Analysis:

1. Validity of the notice issued under section 148 of the Income Tax Act, 1961 for reopening the assessment:
The petitioner challenged the notice dated 3.3.2017 issued under section 148 of the Income Tax Act, 1961, seeking to reopen the assessment for the assessment year 2012-13. The petitioner argued that all facts were duly disclosed during the initial assessment, and the reopening was based on a mere change of opinion, which is not permissible under the law. The court noted that the Assessing Officer had issued the notice based on the belief that the income chargeable to tax had escaped assessment.

2. Whether the reopening of assessment is based on a mere change of opinion:
The court examined whether the reopening of the assessment was based on a change of opinion. It was observed that during the initial scrutiny assessment, the Assessing Officer had called for various details and was satisfied with the explanation provided by the petitioner, accepting the return of income. The court concluded that the reasons recorded for reopening the assessment reflected a mere change of opinion, as the Assessing Officer had already applied his mind to the issue during the original assessment.

3. Applicability of section 170(i) of the Income Tax Act regarding the assessment of income up to the date of succession:
The Assessing Officer sought to reopen the assessment on the ground that the partnership firm was converted into a company and that the firm remained in existence till 30.6.2011. The officer believed that the firm should be assessed for the income up to the date of succession as prescribed under section 170(i) of the Act. However, the court found that the profit earned by the firm was disclosed in the profit and loss account of the successor company, and the tax had been paid on the same.

4. Whether the income alleged to have escaped assessment was already taxed in the hands of the successor company:
The petitioner argued that the income alleged to have escaped assessment was already reflected in the return of income of the successor company, and the tax had been duly paid. The court noted that the profit for the entire year was offered for tax in the books of the successor company and was assessed by the Assessing Officer of the successor company. Therefore, no income could be said to have escaped assessment.

Conclusion:
The court held that the reopening of the assessment was based on a mere change of opinion and lacked validity. The impugned notice issued under section 148 of the Act was quashed and set aside. The petition was allowed, and the rule was made absolute with no order as to costs.

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