Court rules notice to reopen assessment under Section 148 of Income Tax Act for AY 2012-2013 illegal and unjustified.

The court held that the notice issued under Section 148 of the Income Tax Act, 1961, seeking to reopen the assessment for the Assessment Year 2012-2013 was illegal and without jurisdiction. It was found that the Assessing Officer did not have independent satisfaction for reopening the assessment, and the information relied upon was insufficient. The court concluded that the reopening was unjustified as the disputed amount had already been added in the original assessment. The petition was allowed, and the notice was quashed and set aside.

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Issues Involved:
1. Legality of the notice issued under Section 148 of the Income Tax Act, 1961.
2. Validity of reopening the assessment under Section 147 of the Income Tax Act, 1961.
3. Examination of whether the Assessing Officer (AO) had independent satisfaction for reopening the assessment.
4. Consideration of whether there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment.
5. Assessment of whether the transaction amounting to Rs. 20,00,055/- was already scrutinized and added in the original assessment.

Detailed Analysis:

1. Legality of the Notice Issued under Section 148 of the Income Tax Act, 1961:
The writ applicant challenged the notice dated 28.03.2019 issued by the respondent under Section 148 of the Income Tax Act, 1961, seeking to reopen the income tax assessment for the Assessment Year (A.Y.) 2012-2013. The primary contention was that the notice was patently illegal, bad in law, and without jurisdiction because the condition precedent for valid reopening under Section 147 of the Act was not satisfied.

2. Validity of Reopening the Assessment under Section 147 of the Income Tax Act, 1961:
The writ applicant argued that the impugned amount of Rs. 20,00,055/- had already been added by the Assessing Officer at the original assessment stage. The transaction with Mr. Shaileshkumar Naika was scrutinized at the original assessment stage, and the sum of share capital and share premium received from Shaileshkumar Naika was added under Section 68 of the Act. Therefore, there was no escapement of any income chargeable to tax, making the reopening unjustified.

3. Examination of Whether the Assessing Officer (AO) Had Independent Satisfaction for Reopening the Assessment:
The writ applicant contended that the Assessing Officer relied mainly on the information received from the office of DDIT (Investigation-2) for reopening the assessment. The AO did not apply his mind independently to reach the conclusion that income had escaped assessment, making the reopening based on borrowed satisfaction untenable in law.

4. Consideration of Whether There Was a Failure on the Part of the Assessee to Disclose Fully and Truly All Material Facts Necessary for Assessment:
The writ applicant argued that there was no failure to disclose fully and truly all material facts necessary for assessment. The amount of share capital and share premium received, including the sum from Mr. Shaileshkumar Naika, was added under Section 68 of the Act during the original assessment. Thus, all necessary primary evidence was disclosed at the time of scrutiny assessment, making the reopening action unjustified.

5. Assessment of Whether the Transaction Amounting to Rs. 20,00,055/- Was Already Scrutinized and Added in the Original Assessment:
The court noted that the return of income for the year under consideration was filed on 29.09.2012, declaring a total income of Rs. 58,23,400/-. The case was selected for scrutiny assessment, and after considering the necessary materials, the then Assessing Officer framed the assessment under Section 143(3) of the Act, making various additions, including Rs. 5,28,00,000/- under Section 68 of the Act, which included the sum of Rs. 20,00,055/- received from Mr. Shaileshkumar Naika. The court held that the disputed amount of Rs. 20,00,055/- had already been added by the then Assessing Officer under Section 68 of the Act, and the same amount could not be brought to tax again in the reassessment proceedings.

Conclusion:
The court concluded that the Assessing Officer acted mechanically based on the information received from the Investigating Wing, Surat, without independent satisfaction that the income chargeable to tax had escaped assessment. The formation of belief entertained by the Assessing Officer was found to be vague and based on irrelevant material. Therefore, the assumption of jurisdiction under Section 147 of the Act to reopen the assessment was without authority of law, rendering the notice unsustainable. The petition was allowed, and the impugned notice dated 28.03.2019 issued under Section 148 of the Act was quashed and set aside.

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