Court invalidates assessment reopening beyond time limit, lacking material facts, deems it change of opinion

The High Court held that the notice of reopening of assessment for the assessment year 2011-12 was invalid as it was issued beyond the prescribed time limit and lacked allegations of failure to disclose material facts. The Court noted that the Assessing Officer had already examined the issue of share premium during the original assessment and made a limited disallowance. Without new material or significant changes, the Court deemed the attempt to reopen the assessment as a mere change of opinion, ruling in favor of the petitioner and setting aside the notice.

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Issues:
Challenge to notice of reopening of assessment for the assessment year 2011-12.

Analysis:
The petitioner, a company, filed a return of income for the assessment year 2011-12 declaring "Nil" income. The Assessing Officer passed an order under Section 143(3) of the Income Tax Act, 1961, computing the petitioner's income at Rs. 99,000. The Assessing Officer issued a notice of reopening of assessment dated 22nd March, 2018, based on reasons related to share premium. The reasons stated that there was an escapement of income amounting to Rs. 57,85,50,000 due to failure to examine the issue of share premium. The notice was issued under Section 147 of the Income Tax Act, 1961. The petitioner raised objections to the notice, which were rejected by the Assessing Officer. However, the High Court noted that the notice was issued beyond the four-year period from the end of the relevant assessment year and lacked any allegation of failure to disclose material facts, rendering it invalid.

The High Court further observed that the Assessing Officer had already examined the issue of share premium during the original scrutiny assessment. The Assessing Officer had made limited disallowance on this ground in the original assessment order. As there was no new material or tangible evidence outside the record, the High Court held that the Assessing Officer could not re-examine the same issue in the absence of any substantial change in circumstances. The High Court concluded that any attempt by the Assessing Officer to reopen the assessment would amount to a mere change of opinion and set aside the impugned notice. Therefore, the petition challenging the notice of reopening of assessment for the assessment year 2011-12 was disposed of in favor of the petitioner.

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