Court quashes reassessment notice, upholds deficit set-off entitlement.

The Court quashed the notice under section 148 of the Income Tax Act for reopening the assessment for AY 2008-09, citing a lack of fresh material and a mere change of opinion. The Petitioner's entitlement to carry forward and set off the deficit was upheld, emphasizing consistent application of principles from relevant cases. The Court found no failure to disclose material facts and deemed the reassessment notice a case of impermissible change of opinion. Consequently, the challenged notice and order were set aside, ruling in favor of the Petitioner without costs.

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Issues Involved:
1. Validity of notice under section 148 of the Income Tax Act for reopening assessment for AY 2008-09.
2. Legality of the reassessment proceedings and rejection of objections by the Petitioner.
3. Entitlement of the Petitioner to carry forward and set off the deficit in subsequent years.
4. Alleged failure of the Petitioner to make full and true disclosure of relevant material facts.

Detailed Analysis:

1. Validity of Notice under Section 148:
The Petitioner challenged the notice dated 20th March 2015 under section 148 of the Act, which proposed to reopen the assessment for AY 2008-09. The Petitioner contended that the notice was ex-facie illegal and contrary to the provisions of the Act. The original assessment was completed under section 143(3) on 28th December 2010, accepting the Petitioner's returned income.

2. Legality of Reassessment Proceedings:
The Petitioner argued that the reassessment proceedings were initiated without any fresh and tangible material, merely based on a change of opinion, which is not permissible under section 147 of the Act. The Petitioner cited the case of CIT v/s. Institute of Banking Personnel Selection (IBPS) to support that the carry forward and set off of the deficit should be considered in the year of set off, not the year of deficit. The Petitioner also contended that there was no failure to disclose any material fact necessary for the assessment.

3. Entitlement to Carry Forward and Set Off Deficit:
The Petitioner claimed a deficit of Rs. 13,92,05,087/- to be carried forward to subsequent years, which was initially accepted in the original assessment. The Petitioner relied on the judgment in CIT v/s. Institute of Banking Personnel Selection (IBPS), which allowed the carry forward and set off of the current year's deficit with the subsequent year's income tax. The Petitioner argued that this principle was consistently followed in previous years and should apply to the current case.

4. Alleged Failure to Make Full and True Disclosure:
The Respondents argued that the reassessment was justified due to the Petitioner's failure to make full and true disclosure of relevant material facts. They cited the discovery of certain facts during the assessment proceedings for AY 2012-13, where the Petitioner's claim of deficit carry forward was disallowed. The Respondents relied on various judicial pronouncements to support their position that reassessment is permissible even if the information is obtained after proper investigation from the materials on record.

Conclusion:
The Court found merit in the Petitioner's arguments. It referred to the case of CIT v/s. Institute of Banking Personnel Selection (IBPS) and other relevant judgments, concluding that the Petitioner was entitled to carry forward and set off the deficit. The Court noted that the reasons recorded for reopening the assessment were based on a mere perusal of records, indicating a change of opinion rather than new tangible material. The Court held that there was no failure to disclose any material fact necessary for the assessment, and the reassessment notice was a case of change of opinion.

Judgment:
The impugned notice dated 20th March 2015 and the impugned order dated 2nd November 2015 were quashed and set aside. The Court allowed the Petition with no order as to costs.

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