High Court bars reopening assessments on opinion change alone, ruling against Assessing Officer.

The High Court ruled in favor of the petitioner, emphasizing that re-opening an assessment based solely on a change of opinion without tangible material is impermissible under the law. The court found that the Assessing Officer's reasons for re-opening the assessment were flawed, as they were founded on incorrect facts and a mere change of opinion. The court highlighted that if the relevant facts were already considered during the original assessment, a re-opening based on a change of opinion alone is invalid. The court quashed the notice under Section 148 of the Income Tax Act and rejected the petitioner's objections, allowing the petition with no costs.

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Issues involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961 for re-opening the assessment for A.Y. 2017-18.
2. Whether the re-opening of assessment is based on tangible material or mere change of opinion.
3. Consideration of facts and reasons communicated to the petitioner.
4. Assessment proceedings and queries raised by the Assessing Officer.
5. Justification for re-opening the assessment based on change of opinion.
6. Determination of income chargeable to tax and reasons for alleged escapement of income.
7. Legal principles regarding the taxation of notional income on advances.

Detailed Analysis:
1. The High Court considered the validity of the notice issued under Section 148 of the Income Tax Act, 1961 to re-open the assessment for A.Y. 2017-18. The court emphasized that re-opening based on mere change of opinion without tangible material is not permissible under the law.

2. The court analyzed the reasons recorded for re-opening the assessment and found that the Jurisdictional Assessing Officer proceeded on incorrect facts and pure change of opinion. It was noted that the conditions precedent for re-assessment were not met as the information relied upon was received before the original assessment order was passed.

3. The court reviewed the assessment proceedings and queries raised by the Assessing Officer, highlighting that the petitioner had responded to the queries raised during the assessment process. It was established that the queries raised were considered by the Assessing Officer, even if not explicitly mentioned in the assessment order.

4. The judgment emphasized that change of opinion alone cannot justify re-opening the assessment if the Assessing Officer had already considered the relevant facts during the original assessment proceedings. The court held that re-opening the assessment solely based on a change of opinion is not valid under the law.

5. The court examined the alleged escapement of income and the justification provided by the Jurisdictional Assessing Officer. It was observed that the opinion formed regarding the under-assessment of income was not supported by the facts, as the petitioner had not received any interest income as claimed by the Assessing Officer.

6. Legal principles regarding the taxation of notional income on advances were discussed, citing relevant case laws. The court highlighted that unless there is a specific provision empowering the tax authorities to tax notional income, such income cannot be subject to taxation.

7. The judgment concluded by quashing the notice issued under Section 148 of the Act and the order rejecting the petitioner's objections. The court held that re-opening the assessment based on a change of opinion without tangible material was not justified, and the petition was allowed with no order as to costs.

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