High Court quashes Income Tax Act notice and objection rejection, citing lack of tangible material for reassessment.

The High Court quashed the notice issued under Section 148 of the Income Tax Act and the order rejecting the Petitioner's objections. The Court ruled that the Assessing Officer lacked tangible material to justify the reopening of the assessment within four years, emphasizing the requirement of "reason to believe" for such actions and distinguishing between review and reassessment.

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Issues:
Reopening of assessment under Section 148 of the Income Tax Act, 1961 for Assessment Year 2014-2015 challenged in a petition under Article 226 of the Constitution of India.

Analysis:
1. The Petitioner, a Co-operative Credit Society, filed its return of income for Assessment Year 2014-2015 claiming deduction under Section 80P of the Act for interest income received from co-operative Banks.
2. The Assessing Officer issued notices for scrutiny and accepted the claim for deduction under Section 80P during the original assessment proceedings under Section 143(3) of the Act.
3. Subsequently, the Assessing Officer sought to reopen the assessment under Section 148 of the Act based on the premise that deduction under Section 80P was not applicable to income from co-operative Banks, leading to the Petitioner challenging the notice and rejection of objections.
4. The Petitioner argued against the reopening, citing lack of tangible material and the Assessing Officer's prior consideration of the deduction issue during the original assessment.
5. The Revenue contended that the deduction was not applicable to interest received from co-operative Banks as per Section 80P(2)(d) of the Act and that the Assessing Officer was justified in reopening the assessment and rejecting objections.
6. The Court analyzed the provisions of Section 147 and the requirement of "reason to believe" for reopening assessments, emphasizing the distinction between review and reassessment.
7. Relying on legal precedents, the Court concluded that the Assessing Officer lacked tangible material to justify the reopening of the assessment within four years, quashing the notice and rejection of objections.

Conclusion:
The High Court quashed the notice issued under Section 148 of the Act and the order rejecting the Petitioner's objections, ruling that the exercise of jurisdiction under Section 148 was without tangible material.

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