Court rules notice to reopen assessment beyond statutory period & on same matter violates Income Tax Act

The High Court ruled in favor of the petitioner, holding that the notice issued to reopen the assessment for Assessment Year 2011-12 was without jurisdiction. The Court found that the notice was issued beyond the statutory period and sought to reassess a matter already addressed during the regular assessment proceedings, contravening the provisions of the Income Tax Act. Consequently, the Court quashed and set aside the notice, emphasizing that it amounted to a change of opinion and violated the proviso to Section 147 of the Act.

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Issues:
Challenge to notice under Section 148 of the Income Tax Act, 1961 for reopening assessment for Assessment Year 2011-12.

Analysis:
The petitioner filed a return of income for Assessment Year 2011-12 on 30th November, 2011, declaring a total income of Rs. 1.76 crores along with Form 29B for computation of book profit under Section 115JB of the Act. The Assessing Officer, after making inquiries regarding provision for doubtful debts, completed the assessment on 17th March, 2015, without making any addition for the provision of doubtful debt. However, a notice dated 27th March, 2018, was issued seeking to reopen the assessment based on the contention that the petitioner did not add Rs. 8,69,58,000 as provision for doubtful debts while computing book profit under Section 115JB. The reasons for reopening highlighted that income chargeable to tax had escaped assessment due to the omission of this amount. The petitioner objected to the reopening, but the Assessing Officer rejected the objection, leading to the present petition challenging the jurisdiction of the Assessing Officer to issue the notice.

The High Court noted that the impugned notice was issued beyond the 4-year period from the end of the relevant assessment year, and the reasons did not indicate any failure on the petitioner's part to disclose all material facts during the regular assessment proceedings under Section 143(3) of the Act. The Court observed that during the assessment proceedings, queries were raised regarding the provision for doubtful debts, and the petitioner had responded satisfactorily, leading to the determination of book profit under Section 115JB. Therefore, the attempt to review the order dated 17th March, 2015, through the impugned notice was deemed impermissible. Consequently, the Court held that the notice was without jurisdiction as it violated the proviso to Section 147 of the Act and amounted to a change of opinion, thereby quashing and setting it aside.

In conclusion, the High Court disposed of the petition, emphasizing that the impugned notice lacked jurisdiction due to being issued beyond the statutory period and attempting to reassess a matter already considered during the regular assessment proceedings, thereby violating the principles of the Income Tax Act.

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