2022 (1) TMI 945 - HC - Income Tax

Court Invalidates Reassessment for Lack of Material Facts

Macrotech Developers Limited (Successor to Palava Dwellers Pvt. Ltd.) Versus Assistant Commissioner of Income Tax, Central Circle 7 (3), Mumbai, The Principal Commissioner of Income Tax, Central-4 Mumbai, The Union of India,

Macrotech Developers Limited (Successor to Palava Dwellers Pvt. Ltd.) Versus Assistant Commissioner of Income Tax, Central Circle 7 (3), Mumbai, The ... Issues Involved:1. Legality of the Notice issued under Section 148 of the Income Tax Act, 1961.2. Validity of the order rejecting the objections to the impugned notice.3. Whether there was a failure to fully and truly disclose material facts necessary for the assessment.4. Whether the re-opening of assessment was based on a mere change of opinion.Detailed Analysis:1. Legality of the Notice Issued under Section 148 of the Income Tax Act, 1961:The petitioner questioned the legality of the Notice dated 27 March 2019 issued by the Assessing Officer under Section 148, seeking to reopen the assessment for the Assessment Year 2012-13. The petitioner argued that there was no fresh tangible material for initiating re-assessment proceedings and that the assessment was sought to be re-opened on the basis of a mere change of opinion. The court observed that the notice was issued beyond the period of four years from the end of the relevant assessment year, invoking the first proviso to Section 147 of the Act.2. Validity of the Order Rejecting the Objections to the Impugned Notice:The petitioner also challenged the order dated 13 November 2019 passed by the Assistant Commissioner of Income Tax, which rejected the objections raised by the petitioner regarding the validity of the impugned notice. The court noted that the reasons for reopening the assessment, as communicated by the Assessing Officer, were based on the details already furnished during the original assessment proceedings for the Assessment Year 2012-13. Therefore, the re-assessment proceedings were initiated despite the fact that the necessary details were already provided.3. Whether there was a Failure to Fully and Truly Disclose Material Facts Necessary for the Assessment:The court examined whether there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of Assessment Year 2012-13. It was noted that the petitioner had filed the return of income, revised return, and provided all requisite information and documents during the original assessment proceedings. The court concluded that the re-assessment proceedings were initiated based on the same details furnished during the original assessment, indicating no failure on the part of the assessee to disclose material facts.4. Whether the Re-opening of Assessment was Based on a Mere Change of Opinion:The court emphasized that re-opening of the assessment on the basis of a mere change of opinion is not permissible under Section 147 r/w Section 148 of the Act. The court referred to the legal position established in the case of CIT vs. Kelvinator of India Limited and other relevant judgments, which state that a mere change of opinion cannot form the basis of reopening a completed assessment. The court found that the reasons recorded by the Assessing Officer for reopening the assessment did not disclose any failure by the assessee to fully and truly disclose all material facts necessary for the assessment.Conclusion:The court set aside the impugned notice dated 27 March 2019 issued under Section 148 of the Act and the impugned order dated 13 November 2019 passed by the Assistant Commissioner of Income Tax. The petition was allowed, and the re-opening of the assessment for the Assessment Year 2012-13 was deemed invalid as it was based on a mere change of opinion and lacked the necessary conditions for re-assessment. There was no order as to costs.