Court Invalidates Reopening of Assessment & Assessment Order, Emphasizes Need for New Material

The court set aside both the notice of reopening of assessment and the assessment order dated 12.12.2018. It held that the Assessing Officer could not alter the basis of assessing income without new material and that the notice of reopening was issued beyond the permissible period. The court reverted to the pre-assessment order stage, emphasizing that the officer's attempt to tax the entire amount as undisclosed income was impermissible.

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Issues:
Challenge to notice of reopening of assessment and assessment order dated 12.12.2018.

Analysis:
The petitioner, a Private Limited Company, challenged a notice of reopening of assessment dated 31.3.2018 issued by the Joint Commissioner of Income Tax, which was later amended to challenge an assessment order dated 12.12.2018 by the Deputy Commissioner of Income Tax. The petitioner's total income for the assessment year 2012-13 was under scrutiny due to obtaining bogus purchase bills/accommodation entries. The Assessing Officer added a sum to the total income based on profit ratio. The notice of reopening was issued beyond the four-year period from the end of the relevant assessment year, citing reasons for believing that income had escaped assessment due to undisclosed material facts. The petitioner raised objections to the notice, which were rejected, and the assessment order was passed without waiting for the period mandated by a previous court judgment. The court inquired about this oversight, and the Assessing Officer cited high work pressure and apologized. However, the assessment order passed in defiance of the court's order was set aside.

The court did not accept the assessment order passed in defiance of the court's previous judgment and set it aside, reverting to the pre-assessment order stage. On the merits of the challenge to the notice of reopening, the court noted that the Assessing Officer had already included a sum in the original assessment based on bogus purchases and accommodation entries. The officer now sought to tax the entire amount as undisclosed income, which the court found impermissible. The court held that the officer cannot change the basis of assessing income based on a mere change of opinion after completing the assessment without any new material. Therefore, the court set aside the impugned notice of reopening as well.

In conclusion, the court allowed the petition, setting aside both the notice of reopening of assessment and the assessment order dated 12.12.2018, based on the grounds that the Assessing Officer could not change the basis of assessing income without new material, and the notice of reopening was beyond the permissible period.

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