Invalid Notice: Change of Opinion Not Grounds for Reopening Assessment

The court held that the notice under section 148 to reopen the assessment was invalid as it was solely due to a change of opinion by the new assessing officer. The court emphasized that all relevant documents were already scrutinized by the previous assessing officer before passing the assessment order, and any discrepancies should have been noticed then. Consequently, the court quashed the notice under section 148, directing the respondent to cease further proceedings against the petitioner and bear the legal costs.

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Issues:
Jurisdiction of the assessing officer under sections 143(1) and 143(3) of the Income Tax Act, 1961; Validity of notice under section 148 for reopening assessment based on change of opinion; Examination of books of account by previous assessing officer; Allegations of overwriting and interpolation in the books of account.

Analysis:
The petitioner, a registered firm, was assessed for the year 1977-78 by the Income Tax Officer (ITO) under section 143(1) of the Income Tax Act, 1961. Subsequently, the jurisdiction was transferred to a new ITO who issued a notice under section 148 for reopening the assessment based on alleged underassessment due to overwriting and interpolation in the books of account. The petitioner contended that all books of account were examined by the previous ITO before passing the assessment order under section 143(3), and any discrepancies should have been noticed at that time. The court held that the new ITO cannot issue a notice under section 148 merely due to a change in opinion from the previous assessing officer. The notice under section 148 was quashed, and the respondent was directed to cease further proceedings against the petitioner. The court emphasized that a change of opinion cannot be the basis for reopening an assessment under section 147 of the Act.

The court referred to a notice dated December 27, 1979, which required the petitioner to attend the office and provide further information regarding the return of income for the assessment year 1977-78. This notice, along with the examination of books of account by the previous ITO, indicated that all relevant documents were already scrutinized before the assessment order was passed. The court highlighted that the authenticity of this notice cannot be doubted, as it was signed by the then ITO and carried the seal of his office. Therefore, the court concluded that the new ITO's decision to reopen the assessment based on alleged discrepancies in the books of account was without jurisdiction.

In summary, the court found that the notice under section 148 for reopening the assessment was invalid as it was solely based on a change of opinion by the new assessing officer. The court emphasized that the previous assessing officer had already examined all relevant documents before passing the assessment order, and discrepancies should have been identified at that time. Consequently, the court quashed the notice under section 148 and directed the respondent to discontinue further proceedings against the petitioner. The respondent was also ordered to bear the costs of the legal proceedings.

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