Court quashes assessment notice for lack of jurisdiction based on change of opinion

The Court held that the notice for re-opening the assessment lacked jurisdiction as it was based on a change of opinion without any failure to disclose material facts. Consequently, the notice and the order disposing of objections to re-assessment proceedings were quashed and set aside.

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Issues:
Impugning a notice under section 148 of the Income Tax Act, 1961 for AY 2012-13 and the order disposing objections to re-assessment proceedings.

Analysis:
The petitioner challenged a notice dated 30/03/2019 received under section 148 of the Income Tax Act, 1961, for AY 2012-13, and the subsequent order disposing of objections to re-assessment proceedings. The petitioner, formed as a result of a demerger, initially declared a loss in its income tax return. The Assessment Order under section 143(3) determined the total income differently from the revised return filed by the petitioner. The impugned notice for re-assessment was issued by the Jurisdictional Assessing Officer (JAO) based on reasons to believe that income for AY 2012-2013 had escaped assessment. The petitioner's counsel argued that the notice lacked the precondition of failure to disclose material facts required for assessment and amounted to a change of opinion, which is impermissible in law.

The respondents contended that even if the reasons for re-opening assessment did not explicitly state a failure to disclose material facts, it would not invalidate the jurisdiction under Sections 147 and 148 of the Act. However, the Court emphasized that there must be a clear indication in the reasons supplied that there was indeed a failure to disclose material facts. The Court cited a previous judgment to support the requirement of a cogent indication of such failure in the reasons for re-assessment. The Court highlighted that if no case of failure to disclose is evident from the reasons, the assumption of jurisdiction under Sections 147 and 148 would exceed the legal constraints imposed by the Act.

The Assessing Officer sought to re-open the assessment based on disallowing certain prior period expenses, claiming they were not allowable during the assessment year. However, the Court found that the re-opening was merely a change of opinion based on the same set of material, which is impermissible. The Court emphasized that when all necessary facts for assessment are disclosed, the Assessing Officer cannot initiate reassessment proceedings based solely on a change of opinion. Referring to a previous judgment, the Court reiterated that it is impermissible to re-open an assessment to take another view based on the same material already considered during the original assessment.

In conclusion, the Court held that the notice for re-opening the assessment lacked jurisdiction as it was based on a change of opinion without any failure to disclose material facts. Consequently, the notice and the order disposing of objections to re-assessment proceedings were quashed and set aside. The petition was disposed of accordingly, with no order as to costs.

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