Court quashes reassessment based on undisclosed facts, deems change of opinion impermissible.

The court found that the petitioner had fully disclosed all material facts necessary for assessment, and the reassessment was deemed to be based on a change of opinion, which is impermissible. Consequently, the court quashed and set aside the notice issued under Section 148 of the Income Tax Act and the order rejecting the petitioner's objections. The court emphasized the importance of specifying undisclosed material facts by the assessee for justifying reassessment after four years.

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Issues Involved:

1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961.
2. Compliance with jurisdictional conditions for initiating reassessment proceedings.
3. Alleged failure to disclose fully and truly all material facts necessary for assessment.
4. Reopening of assessment based on change of opinion.

Issue-Wise Detailed Analysis:

1. Validity of the Notice Issued Under Section 148 of the Income Tax Act, 1961:

The petitioner challenged the validity of the notice dated 27/03/2019 issued under Section 148 of the Income Tax Act, 1961, for reopening the assessment for the assessment year 2012-2013. The petitioner argued that the notice was without jurisdiction and that the jurisdictional conditions required for initiating reassessment proceedings were not satisfied.

2. Compliance with Jurisdictional Conditions for Initiating Reassessment Proceedings:

The petitioner contended that its books were regularly audited, and all necessary details were provided during the original assessment. The original assessment was completed on 17th March 2015 under Section 143(3) of the Act. The reassessment notice was issued more than four years later, on 27th March 2019. The petitioner argued that there was no fresh or tangible material to justify the reassessment and that the reassessment was based on a change of opinion.

3. Alleged Failure to Disclose Fully and Truly All Material Facts Necessary for Assessment:

The respondent argued that the petitioner had failed to disclose fully and truly all material facts necessary for assessment. The reasons for reopening stated that the petitioner had irregularly claimed construction period notional interest, wrongly claimed deduction under Section 80 IB of the Act on total income instead of business income, and claimed deduction on capital gains and income from other sources. The respondent contended that these issues were not fully and truly disclosed during the original assessment.

4. Reopening of Assessment Based on Change of Opinion:

The petitioner argued that the reassessment was based on a change of opinion, which is not permissible. The petitioner had provided all necessary details during the original assessment, and the reassessment was based on the same material facts already on record. The petitioner cited various judgments to support the argument that mere change of opinion does not justify reassessment.

Court's Analysis and Judgment:

The court noted that the assessment was sought to be reopened after more than four years, and hence, the proviso to Section 147 of the Act was applicable. The court emphasized that for reopening an assessment after four years, there must be a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. The court observed that the reasons for reopening did not specify what material facts were not disclosed by the petitioner. The court referred to various judgments, including Calcutta Discount Co. Ltd. and Bhanji Lavji, to highlight that the duty of the assessee is to disclose all primary facts, but it is the duty of the Assessing Officer to draw inferences from those facts.

The court concluded that the petitioner had truly and fully disclosed all material facts necessary for the assessment. The reassessment was based on a change of opinion, which is not permissible. The court quashed and set aside the notice dated 27th March 2019 issued under Section 148 of the Act and the order dated 30th September 2019 rejecting the petitioner's objections.

Conclusion:

The petition was allowed, and the notice and order for reopening the assessment were quashed and set aside. The court emphasized that reassessment based on a change of opinion is not permissible and that the Assessing Officer must specify what material facts were not disclosed by the assessee to justify reopening the assessment after four years.

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