High Court quashes reassessment notice for A.Y. 2017-18 due to lack of valid reasons.

The High Court ruled in favor of the petitioner, finding that the re-opening of the assessment under Section 148 for A.Y. 2017-18 lacked valid reasons and was solely based on a change of opinion. The Court held that the issues raised for re-opening had already been considered during the original assessment proceedings and did not justify the reassessment. Consequently, the Court quashed the notice under Section 148, the order rejecting objections, and a subsequent notice under Section 143(2), thereby allowing the petitioner's petition.

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Issues:
1. Validity of notice dated 30th March 2021 issued under Section 148 of the Income Tax Act, 1961 for A.Y. 2017-18 and the order dated 10th December 2021 rejecting petitioner's objections.

Analysis:
The High Court examined the re-opening of assessment before the expiry of four years from the relevant assessment year. It was noted that if an assessment has been completed under Section 143(3), re-opening cannot be based on a change of opinion. The Court analyzed the reasons for re-opening and found that the proposed re-opening was indeed on the basis of a change of opinion. Two main issues were raised in the reasons for re-opening: firstly, the treatment of unsold flats in the profit and loss account and balance sheet, and secondly, the market value of certain flats exceeding the agreement value, triggering the provisions of Section 43CA(1) of the Act.

Regarding the first issue, the Court referred to a previous order where identical reasons were recorded for a different assessment year. The Court highlighted that the Assessing Officer had the benefit of relevant judgments but did not find any discrepancies during the original assessment proceedings. This led the Court to conclude that the re-opening based on this issue was merely a change of opinion and not a valid reason to believe that income had escaped assessment.

On the second issue concerning the market value of certain flats, the Court noted that this aspect was already considered during the original assessment proceedings, even though it was not explicitly discussed in the assessment order. The Court emphasized that once a query is raised and responded to by the assessee, it is deemed to have been considered by the Assessing Officer. Therefore, the Court held that the re-opening based on this issue was also unjustified and constituted a change of opinion.

Ultimately, the Court allowed the petition and quashed the notice dated 30th March 2021 under Section 148 for A.Y. 2017-18, the order rejecting petitioner's objections, and a subsequent notice under Section 143(2) dated 29th December 2021. The Court concluded that the re-opening of the assessment lacked valid reasons and was merely based on a change of opinion, thus ruling in favor of the petitioner.

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