Court invalidates reassessment orders for 2008-09 & 2009-10 due to lack of jurisdiction and time limitation.

The court set aside the reassessment orders for the assessment years 2008-09 and 2009-10, finding them impermissible due to lack of jurisdiction, constituting a change of opinion, and being influenced by audit objections that cannot serve as a basis for reassessment. The court ruled that reassessment beyond the four-year limitation period was invalid as there was no failure on the part of the assessee to disclose material facts. The appeals were allowed with no costs imposed.

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Issues Involved:
1. Assumption of jurisdiction to reassess under Section 147 read with Section 148 of the Income Tax Act, 1961.
2. Non-furnishing of reasons for reopening in terms of the GKN Driveshafts case.
3. Reassessment based on audit objections and whether it constitutes a change of opinion.
4. Availability and adequacy of alternate remedy.
5. Validity of reassessment beyond the four-year limitation period.

Detailed Analysis:

I. Assumption of Jurisdiction to Reassess:
The appellant challenged the reassessment orders for the assessment years 2008-09 and 2009-10, arguing that the jurisdiction to reassess under Section 147/148 was improperly assumed. The court held that the power of reassessment cannot be exercised on mere change of opinion. The original assessments had already considered the issue of depreciation on Dealer and Vendor Network (DVN) and goodwill, and thus, revisiting these issues without new tangible material was impermissible.

II. Non-Furnishing of Reasons for Reopening:
The appellant contended that the reasons for reopening were not furnished, violating the procedure mandated by the Supreme Court in GKN Driveshafts. The court noted that the reasons must be provided to the assessee, and failure to do so vitiates the reassessment proceedings. Despite repeated reminders, the reasons were not furnished, which was a procedural lapse.

III. Reassessment Based on Audit Objections:
The court examined whether the reassessment based on audit objections constituted a change of opinion. The audit had suggested that DVN did not constitute "commercial rights" and thus depreciation should be disallowed. The court found that the audit's opinion on a legal question cannot form the basis for reassessment. The assessing officer initially resisted the audit's view, stating there was no new material to justify reassessment. The court held that reassessment based on audit objections, without new tangible material, was a mere change of opinion and therefore impermissible.

IV. Availability and Adequacy of Alternate Remedy:
The learned Single Judge had dismissed the writ petitions on the grounds of availability of an alternate remedy. However, the court held that the existence of an alternate remedy does not bar the exercise of judicial review under Article 226 if the proceedings are bad for want of jurisdiction. The court found that the reassessment proceedings were indeed bad for want of jurisdiction, thus warranting interference despite the alternate remedy.

V. Validity of Reassessment Beyond the Four-Year Limitation Period:
For the assessment year 2008-09, the reassessment was beyond the four-year period. The court emphasized that for reassessment beyond four years, there must be a failure on the part of the assessee to fully and truly disclose all material facts. The court found no such failure on the part of the assessee and noted the absence of a finding to this effect in the reassessment order. This additional infirmity rendered the reassessment invalid.

Conclusion:
The court set aside the order of the learned Single Judge and the reassessment orders dated 31.12.2014 for the assessment years 2008-09 and 2009-10. The reassessment proceedings were found to be bad for want of jurisdiction, constituting a change of opinion, and were influenced by audit objections which cannot form the basis for reassessment. The appeals were allowed, and no costs were imposed.

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