Court quashes notice reopening assessment, cites lack of new material. Upholds original assessment order.

The High Court quashed the notice under section 148 for reopening the assessment as it was issued in the name of a non-existent entity and constituted a change of opinion without new tangible material. The court upheld the original assessment order under section 143(3) and ruled in favor of the petitioner, holding that the reopening was not justified.

---

---

Issues Involved:
1. Validity of notice under section 148 issued in the name of a non-existent entity.
2. Alleged suppression of income and improper disallowance under section 14A.
3. Reopening of assessment beyond four years on the grounds of change of opinion.

Issue-wise Detailed Analysis:

1. Validity of Notice Under Section 148 Issued in the Name of a Non-Existent Entity:
The petitioner challenged the notice dated 13.12.2017 issued under section 148 of the Income Tax Act, 1961, for reopening the assessment for the Assessment Year 2012-2013. The petitioner argued that the notice was issued in the name of the amalgamating company, which had ceased to exist due to its merger with the petitioner company, as sanctioned by the court on 27.08.2014. The petitioner contended that any notice issued in the name of a non-existent entity is non-est and void in law. The court observed that the assessment order under section 143(3) was passed on 16.03.2015 in the name of the old company, and the notice under section 148 was issued in the name of the amalgamating company instead of the new company. The court held that the notice issued in the name of a non-existent entity is not tenable in law and quashed the notice.

2. Alleged Suppression of Income and Improper Disallowance Under Section 14A:
The petitioner claimed a deduction of Rs. 27,62,980/- for Keyman insurance premium, which was reflected in the balance sheet under Long Term Loans and Advances. The Assessing Officer initially allowed this deduction but later issued a notice for reopening the assessment, alleging that the policies were not pure life insurance policies but investment plans, and thus, the deduction was wrongly allowed. Additionally, the Assessing Officer noted an error in the computation of disallowance under section 14A, where certain investments yielding exempt income were not considered. The court found that the petitioner had fully disclosed all material facts during the original assessment, and the Assessing Officer had already examined these issues. The court held that reopening the assessment on these grounds constituted a change of opinion, which is not permissible.

3. Reopening of Assessment Beyond Four Years on the Grounds of Change of Opinion:
The petitioner argued that the reopening of the assessment beyond four years was illegal, as there was no failure on the part of the assessee to fully and truly disclose all material facts necessary for assessment. The court noted that the Assessing Officer had thoroughly examined the issues related to Keyman insurance premium and disallowance under section 14A during the original assessment. The court referred to the Supreme Court's decision in Commissioner of Income Tax v. Kelvinator of India Ltd., which held that a mere change of opinion cannot justify reopening an assessment. The court concluded that the reopening of the assessment was based on a change of opinion and not on any new tangible material, rendering the notice under section 148 invalid.

Conclusion:
The High Court quashed the notice under section 148 and the consequential order disposing of the objections raised by the petitioner. The court ruled that the reopening of the assessment was not justified, as it was based on a change of opinion and issued in the name of a non-existent entity. The assessment order under section 143(3) was upheld, and the rule was made absolute to the extent of quashing the notice and the consequential order.

---