Court deems notices challenging income nature impermissible; Sections 147/148 ITA invoked. Notices under Sections 143(2) & 142(1) stayed.

The Court found the notices challenging the nature of income as impermissible 'change of opinion' under Sections 147/148 of the Income Tax Act. Consequently, notices under Sections 143(2) and 142(1) were deemed without jurisdiction and stayed pending further proceedings. The Court emphasized previous rulings establishing carbon credit as a capital receipt and granted time for responses from both parties.

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Issues:
1. Validity of notice dated 30.3.2021 issued under Section 148
2. Validity of notice dated 6.12.2021 issued under Section 143(2)
3. Validity of notice dated 27.01.2022 issued under section 142(1)

Analysis:
1. The petitioner filed a return of income disclosing exempt income of Rs. 1,84,37,272 under Section 139(1) of the Income Tax Act, 1961. The assessing authority issued notices under Sections 142(1) and 143(3) for regular assessment. The petitioner claimed the income as REC receipt under Section 10 of the Act, citing it as a capital receipt not liable to tax. The assessing authority passed an assessment order accepting the claim. The High Court previously held in a similar case that carbon credit is a capital receipt. The current issue arose due to a notice under Section 148 challenging the nature of the income. The Court found the notice to be based on a 'change of opinion,' which is impermissible under Sections 147/148 of the Act. Consequently, the notices under Sections 143(2) and 142(1) were also deemed without jurisdiction. The Court stayed the impugned notices pending further proceedings.

2. The petitioner had complied with all requirements and provided detailed explanations regarding the nature of the income claimed as exempt. The assessing authority, after due consideration, had computed the total income of the assessee. The Division Bench of the Court had previously ruled that carbon credit constitutes a capital receipt. Despite these precedents and the petitioner's submissions, the notice under Section 148 challenged the capital nature of the income. The Court found this challenge to be a 'change of opinion,' leading to the notices under Sections 143(2) and 142(1) being considered prima facie without jurisdiction. The Court granted time for the Income Tax Department to file a counter affidavit and for the petitioner to respond accordingly.

3. The petitioner's case revolves around the treatment of income claimed as exempt, specifically related to REC receipt under Section 10 of the Act. The assessing authority had accepted this claim previously, and the High Court had established in earlier cases that carbon credit is a capital receipt. However, the current dispute arose from a notice challenging the capital nature of the income, which the Court deemed as a 'change of opinion.' As a result, the notices issued subsequently under Sections 143(2) and 142(1) were considered prima facie without jurisdiction. The Court granted time for filing affidavits and scheduled the matter for further proceedings after six weeks.

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