Invalid Reassessment: Change of Opinion Not Enough

The court held that the reassessment proceedings were invalid as they were based on a mere change of opinion by the Assessing Officer (AO) and did not meet the jurisdictional requirements. The court quashed the notice issued under Section 148 of the Income Tax Act, 1961, and the subsequent assessment order. The court emphasized the importance of tangible material for the AO to believe in income escapement, as per established legal principles.

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Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961.
2. Legality of the reassessment proceedings and assessment order.
3. Allegation of change of opinion by the Assessing Officer (AO).
4. Compliance with procedural requirements as per judicial precedents.

Issue-wise Detailed Analysis:

1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961:
The writ applicant challenged the impugned notice dated 31.03.2019 issued under Section 148 of the Income Tax Act, 1961. The applicant argued that the reopening of the assessment was based on the same set of facts that were already scrutinized and decided in the previous assessment proceedings. The applicant contended that the notice was bad in law and without jurisdiction, as it was merely a change of opinion by the AO.

2. Legality of the reassessment proceedings and assessment order:
The reassessment proceedings were initiated beyond the period of four years from the end of the relevant assessment year. It is a settled law that to confer jurisdiction under clause (a) of Section 147 of the Act, beyond the period of four years, two conditions are required to be fulfilled: (i) the AO must have reason to believe that the income chargeable to tax has escaped assessment; and (ii) such escapement was due to the failure to disclose fully and truly all material facts necessary for the assessment. The court found that the AO had previously scrutinized and accepted the details furnished by the assessee, including the registered sale deed and bank transactions. Therefore, the reassessment proceedings were deemed invalid.

3. Allegation of change of opinion by the Assessing Officer (AO):
The court observed that the initiation of the reassessment proceedings was based on the same set of facts that were relied upon during the original assessment proceedings. The AO had consciously applied his mind to the relevant facts and material available at that time and framed the assessment accordingly. The attempt to reopen the assessment was viewed as a mere change of opinion, which is not permissible in law. The court relied on the principle laid down in CIT Vs. Kelvinator India Ltd., where it was held that the concept of 'change of opinion' acts as an inbuilt test to check the abuse of power by the AO.

4. Compliance with procedural requirements as per judicial precedents:
The applicant argued that the revenue did not follow the directions given in the case of Asian Paints Ltd. Vs. Deputy Commissioner of Income Tax, 2008 (296) ITR 90 (BOM), where it was directed that if the AO does not accept the objections filed by the assessee, he shall not proceed further in the matter within a period of four weeks from the date of receipt of service of the said order on objections. The court noted that the revenue had failed to provide sufficient time for the applicant to approach the competent court, thus violating the procedural requirements.

Conclusion:
The court concluded that the reopening of the assessment was without jurisdiction and amounted to a change of opinion. The impugned notice dated 31.03.2019 and the assessment order dated 29.08.2019 were quashed and set aside. The writ application was allowed, and the court emphasized the necessity of tangible material for the AO to form a belief of income escapement, as per the principles laid down by the Supreme Court and other judicial precedents.

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