Court dismisses challenge to Income Tax Act notice & reassessment order, finds new evidence of stock manipulation.

The court dismissed the writ petition challenging a notice under Section 147 of the Income Tax Act and a re-assessment order. The court found fresh tangible material implicating the petitioner in trading penny stocks and manipulating share prices, contradicting the petitioner's argument of a change of opinion. Despite the lack of the Principal Commissioner's signature on the Form for recording reasons, a note in the file indicated approval, leading the court to conclude that prior sanction was on record. The court clarified it did not express any opinion on the merits, leaving all parties' rights and contentions open.

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Issues:
Challenge to notice under Section 147 of the Income Tax Act and re-assessment order.

Analysis:
The petitioner challenged a notice issued under Section 147 of the Income Tax Act, 1961, and a re-assessment order. The petitioner argued that the notice was issued after the expiry of four years without meeting the requirements of Sections 147/148 of the Act, specifically mentioning the first proviso to Section 147. The petitioner contended that there was no failure to disclose material facts during the original assessment proceedings. The petitioner relied on the Supreme Court decision in Commissioner of Income Tax v. Kelvinator of India Ltd. to support the argument that a notice under Section 147 after four years, following a scrutiny assessment, is considered a change of opinion. Additionally, the petitioner claimed that the Principal Commissioner of Income Tax did not give approval or sanction for the notice, pointing to a Form in the paper book as evidence.

The Respondent-Revenue presented a detailed report regarding beneficiaries of bogus LTCG/STCL related to the Financial Year 2012-13. The report implicated the petitioner in trading penny stocks, specifically Mahanivesh (India) Ltd., indicating manipulation of share prices and booking of bogus profits and losses. The court found fresh tangible material in the form of this report, prepared by the office of Deputy Director of Income Tax (Investigation), which revealed the petitioner's involvement in trading penny stocks. The court concluded that this case did not involve a change of opinion, contrary to the petitioner's argument based on the Kelvinator of India Ltd. case.

Although the Form for recording reasons did not bear the Principal Commissioner of Income Tax's signature, a note in the file indicated the Principal Commissioner's agreement with the findings and reasonings recorded by the Assessing Officer and the Range Head. The court noted that the file contained a note where the Principal Commissioner of Income Tax granted approval, and since this document was not challenged as forged or fabricated, the court held that prior sanction was on record. Consequently, the court dismissed the writ petition, clarifying that it had not expressed any opinion on the merits of the controversy, leaving the rights and contentions of all parties open.

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