Court quashes improper tax assessment notice under Section 148

The court quashed the notice under Section 148 of the Income Tax Act, 1961, for reopening the assessment, as it was issued without specifying undisclosed information and was based on a change of opinion. The court found that the jurisdictional requirements for reassessment beyond four years were not met, as there was no failure to disclose material facts by the Petitioner. The reassessment lacked new tangible material and was deemed impermissible. Consequently, the court allowed the Petition, setting aside all related proceedings.

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Issues Involved:
1. Challenge to the notice under Section 148 of the Income Tax Act, 1961.
2. Validity of reopening assessment under Section 147 of the Income Tax Act, 1961.
3. Jurisdictional requirements for reassessment beyond four years.
4. Allegation of change of opinion by the Assessing Officer.

Detailed Analysis:

1. Challenge to the notice under Section 148 of the Income Tax Act, 1961:
The Petitioner contested the notice dated 29 March 2019, issued under Section 148, aimed at reopening the assessment for the assessment year 2012-13 on the grounds that income chargeable to tax had escaped assessment. The Petitioner argued that the notice was issued mechanically without specifying what information was undisclosed by the assessee, rendering the proceedings unsustainable in law.

2. Validity of reopening assessment under Section 147 of the Income Tax Act, 1961:
The Petitioner highlighted that the reasons recorded for reopening did not reflect any failure to disclose fully and truly any material facts necessary for assessment during the original assessment proceedings. The Petitioner maintained that the reopening was based on a change of opinion, which is impermissible as per the judgment in Commissioner of Income-tax, Delhi Vs. Kelvinator of India Ltd. [2010] 187 Taxman 312 (SC).

3. Jurisdictional requirements for reassessment beyond four years:
The court noted that under Section 147, the Assessing Officer (A.O.) could reopen an assessment within four years if there is reason to believe that income has escaped assessment. Beyond four years, the A.O. must also be satisfied that the assessee failed to disclose fully and truly all material facts necessary for assessment. In this case, the reopening was sought beyond four years, necessitating both conditions to be met. The court found that the reasons recorded did not indicate any failure on the Petitioner's part to disclose material facts, thus failing the jurisdictional requirements.

4. Allegation of change of opinion by the Assessing Officer:
The court emphasized that the reassessment must be based on tangible material and should not merely be a review of the earlier assessment. The court referred to the Supreme Court's ruling in Commissioner of Income-tax Vs. Kelvinator of India Ltd [2010] 320 ITR 561 (SC), which held that the A.O. has no power to review and that reassessment should be based on new tangible material. The court found that the issue of Rs.75,00,000/- received on redemption of preference shares was already considered during the original assessment under Section 143(3), and reopening on the same grounds amounted to a change of opinion, which is not permissible.

Conclusion:
The court concluded that the jurisdictional conditions for reassessment under Section 147 beyond four years were not satisfied, as there was no failure on the Petitioner's part to disclose material facts. Additionally, the reassessment was based on a change of opinion, lacking tangible new material. Therefore, the court quashed the notice dated 29 March 2019, the Order dated 4 October 2019, and the further communication dated 5 November 2019. The Petition was allowed, setting aside the impugned proceedings.

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