Invalid assessment reopening under Income Tax Act Section 148; Court quashes notice.

The court held that the reopening of the assessment under Section 148 of the Income Tax Act was invalid as it did not meet the statutory requirements. The Petitioner had fully disclosed all material facts necessary for assessment, and the reassessment was deemed to be based on a change of opinion by the Assessing Officer, which was impermissible. Consequently, the court quashed the notice and order, ruling in favor of the Petitioner and disposing of the writ petition without costs.

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Issues Involved:
1. Validity of the reopening of assessment under Section 148 of the Income Tax Act, 1961.
2. Whether there was a failure to disclose fully and truly all material facts necessary for assessment by the Petitioner.
3. Whether the reopening of the assessment was based on a change of opinion by the Assessing Officer.

Issue-wise Detailed Analysis:

1. Validity of the reopening of assessment under Section 148 of the Income Tax Act, 1961:
The Petitioner received a notice under Section 148 of the Act on 31st March 2019, informing them that income had escaped assessment for Assessment Year 2012-13. The Petitioner argued that the notice was issued beyond the period of four years from the end of the relevant assessment year, making it invalid under the first proviso to Section 147 of the Act. The court noted that the Assessing Officer must have tangible material to believe that there was an escapement of income and that there was a failure to disclose fully and truly all material facts. The court found that the reasons for reopening the assessment did not indicate any material fact that was not disclosed by the Petitioner. The court concluded that the reopening of the assessment was invalid as it did not meet the requirements of Section 147 of the Act.

2. Whether there was a failure to disclose fully and truly all material facts necessary for assessment by the Petitioner:
The Petitioner had disclosed all material facts in their return of income and during the assessment proceedings. The court observed that the Petitioner had provided detailed information regarding the long-term capital loss claimed on account of capital reduction in shares of its subsidiary, Ponds Exports Limited. The court found that the Petitioner had made a full and true disclosure of all material facts necessary for the assessment. The court referred to the Supreme Court's decision in Calcutta Discount Co. Ltd. v. Income Tax Officer, which held that the duty of the assessee is to disclose all primary facts relevant to the assessment. The court concluded that the Petitioner had fulfilled this duty and there was no failure to disclose material facts.

3. Whether the reopening of the assessment was based on a change of opinion by the Assessing Officer:
The court noted that the Assessing Officer had previously allowed the long-term capital loss claimed by the Petitioner during the original assessment under Section 143(3) of the Act. The reasons for reopening the assessment indicated that the Assessing Officer had taken a different view based on the same material facts that were already on record. The court referred to the decision in Ananta Landmark Pvt. Ltd. v. Deputy Commissioner of Income Tax, which held that reopening of assessment based on a change of opinion is not permissible. The court concluded that the reopening of the assessment in the present case was based on a mere change of opinion and was therefore invalid.

Conclusion:
The court ruled that the Assessing Officer had no jurisdiction to issue the notice under Section 148 of the Act, as the conditions for reopening the assessment after four years were not met. The court found that the Petitioner had fully and truly disclosed all material facts necessary for the assessment and that the reopening was based on a change of opinion. Consequently, the court quashed and set aside the impugned notice dated 31st March 2019 and the impugned order dated 10th September 2019. The writ petition was disposed of with no order as to costs.

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