2021 (3) TMI 901 - HC - Income Tax

High Court quashes assessment reopening notice under Income-Tax Act, finding lack of justification.

SAHAJANAND MEDICAL TECHNOLOGIES PVT. LTD. Versus DY. COMMISSIONER OF INCOME TAX CIRCLE 2 (1) (2)

The High Court ruled in favor of the writ applicant, quashing the notice for reopening the assessment for A.Y. 2012-13 under Section 148 of the Income-Tax ... Reopening of assessment u/s 147 - reopening of the assessment beyond the period of four years and that of a scrutiny assessment undertaken under Section 143(3) - HELD THAT:- It appears to be a case of change of opinion. The objections raised by the assessee are quite exhaustive going to the root of the issue. Ms. Raval, the learned senior standing counsel appearing for the Revenue vehemently opposed this writ application submitting that it is not a case of mere change of opinion. According to her, something tangible has come to the notice of the AO of which cognizance at the relevant point of time was not taken and, therefore, the reopening though beyond the period of four years in a case of scrutiny assessment. We are not convinced with the case put up by the Revenue for the purpose of opposing this writ application. There is one another good ground to allow this writ application. It is evident on plain reading of the order dated 17th August, 2018, disposing of the objections, that the same is not a speaking order. Not a single objection raised by the Assessee has been even prima facie dealt with. We are convinced that the impugned notice for reopening is not sustainable in law. Issues:Reopening of assessment for A.Y. 2012-13 beyond four years and scrutiny assessment under Section 143(3) of the Income-Tax Act.Analysis:1. The writ applicant sought relief through a writ application under Article 226 of the Constitution of India to quash the notice dated 15.12.2017 under section 148 of the Income-Tax Act, 1961, for reopening the assessment for A.Y. 2012-13. The case involved scrutiny assessment under Section 143(3) of the Act.2. The reasons for reopening the assessment included discrepancies in the deduction claims made by the assessee under different sections of the Income-Tax Act. The Assessing Officer noted that excess deduction was allowed to the assessee, resulting in under-assessment of income. Therefore, the case was reopened under section 147 of the I.T. Act.3. The objections raised by the assessee were disposed of by the Assessing Officer through an order dated 17th August 2018. However, the High Court observed that the order did not address the objections raised by the assessee, indicating a lack of proper consideration.4. The High Court considered the arguments presented by both parties and concluded that the reopening of the assessment was not justified. It was noted that the objections raised by the assessee were comprehensive and went to the root of the issue, suggesting a possible case of change of opinion rather than new tangible information coming to light.5. Ultimately, the High Court found that the impugned notice for reopening the assessment was not sustainable in law. Therefore, the writ application was allowed, and the notice dated 15.12.2017 under section 148 of the Income-Tax Act, 1961, was quashed and set aside.In conclusion, the High Court's judgment focused on the lack of justification for reopening the assessment beyond the four-year period, citing the comprehensive objections raised by the assessee and the absence of proper consideration in the Assessing Officer's order. The court deemed the impugned notice unsustainable in law and ruled in favor of the writ applicant, setting aside the notice for reopening the assessment.