Invalid Second Notice under Income-tax Act Section 148: Lack of New Material

The court held that the second notice issued under Section 148 of the Income-tax Act was not justified as it was based on a mere change of opinion without new tangible material. The Assessing Officer lacked a valid "reason to believe" that income had escaped assessment. Therefore, the assumption of jurisdiction under Section 147 was deemed unsustainable. The writ petition was allowed, and the impugned notice dated March 3, 2015, was quashed. No order as to costs was given.

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Issues Involved:
1. Validity of the notice issued under Section 148 of the Income-tax Act, 1961.
2. Whether the amount received by the petitioner qualifies as capital gains or business income.
3. Change of opinion by the Assessing Officer.
4. Application of Section 147 of the Income-tax Act for income escaping assessment.

Detailed Analysis:

1. Validity of the Notice Issued Under Section 148:
The petitioner challenged the notice dated March 3, 2015, issued under Section 148 of the Income-tax Act, 1961, for the assessment year 2008-09. The petitioner had previously filed a return of income declaring Rs. 1,86,05,928, which included capital gains of Rs. 1,50,00,000 after claiming exemptions against a consideration of Rs. 4,00,00,000 for transferring part of the rights in the brand name "MTR." The return was initially accepted under Section 143(3) on December 31, 2010. However, a subsequent notice under Section 148 was issued on January 9, 2014, and another on March 3, 2015, prompting the writ petition.

2. Classification of Income:
The petitioner argued that the amount received from M/s. MTR Food Products was capital gains from the transfer of part of the rights in the trademark "MTR." This was initially accepted by the Department. However, the Revenue contended that the amount should be taxed as business income under Section 28(va)(b) of the Act, arguing that the transaction did not qualify as a capital asset.

3. Change of Opinion:
The court noted that the reasons recorded for issuing both notices under Section 148 were verbatim similar, with only a minor difference in terminology ("patent right" vs. "trademark right"). The court emphasized that the Assessing Officer had already examined the transaction during the original assessment and subsequent proceedings. The issuance of the second notice without new tangible material indicated a mere change of opinion, which is not permissible for reopening an assessment.

4. Application of Section 147 for Income Escaping Assessment:
The court referred to Section 147, which allows reassessment if the Assessing Officer has reason to believe that income has escaped assessment. However, the court highlighted that there was no new material or tangible evidence to justify the reassessment. The original records and multiple submissions by the petitioner had already disclosed all material facts. The court cited several precedents, including the Supreme Court's ruling in CIT v. Kelvinator of India Ltd., which emphasized that reassessment must be based on tangible material and not a mere change of opinion.

Conclusion:
The court concluded that the second notice under Section 148 was not justified as it was based on a change of opinion without any new tangible material. The Assessing Officer had no valid "reason to believe" that income had escaped assessment. Therefore, the assumption of jurisdiction under Section 147 was unsustainable. The writ petition was allowed, and the impugned notice dated March 3, 2015, was quashed. No order as to costs was made.

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