Taxpayer's petition allowed; notice under s.148 quashed as sanction under s.151(ii) improperly granted; reassessment set aside under s.148A(b)/(d)

HC allowed the taxpayer's petition and quashed the notice under s.148 and related proceedings. The court held the sanction was not obtained as required by s.151(ii) and was improperly granted, the approving order and notice under s.148A(d) being therefore invalid. The HC found the relied-upon instructions inapplicable and stressed that reassessment cannot be based on mere change of opinion; AO must follow the procedure under s.148A(b) and s.148 and cannot review an assessment where relevant particulars were earlier considered. The reopening of assessment was set aside and appeal allowed.

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Issues Involved:
1. Limitation and Validity of Notice
2. Specified Authority for Sanction
3. Change of Opinion

Summary:

1. Limitation and Validity of Notice:
The petitioner challenged the notice dated 25th June 2021 issued under Section 148 of the Income Tax Act, 1961, arguing it was issued under the provisions of Sections 147 to 151 as they stood prior to their substitution by the Finance Act, 2021. The petitioner contended that the notice was beyond limitation and lacked the required "information" under Section 148. The court noted that the notice was issued almost three years after the original assessment order dated 23rd December 2018, which had accepted the revised return of income without adjustments.

2. Specified Authority for Sanction:
The petitioner argued that the sanction for the notice should have been obtained from the Principal Chief Commissioner or Principal Director General as per Section 151(ii) of the Act, since more than three years had elapsed from the end of the relevant assessment year. The court agreed, stating that the approval from the Principal Commissioner of Income Tax-8 was invalid. The court emphasized that TOLA (Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020) only extended the period of limitation and did not amend the scope of Section 151. The court referred to several judgments, including Tata Communications Transformation Services Ltd. and J.M. Financial & Investment Consultancy Services Pvt Ltd., which held that TOLA does not apply to assessment years 2015-16 and subsequent years.

3. Change of Opinion:
The petitioner contended that the reassessment was based on a change of opinion, as the issue of software consumables had been considered during the original assessment proceedings. The court agreed, noting that the Assessing Officer had accepted the revised return after considering the transaction-wise summary of software consumables provided by the petitioner. The court cited the Supreme Court judgment in Kelvinator of India Ltd., which emphasized that the Assessing Officer has no power to review but only to reassess, and that reassessment based on a change of opinion is not permissible. The court also referred to the judgments in Aroni Commercials Ltd. and Dr. Mathew Cherian, which held that issues decided during the original assessment cannot be revisited in the guise of reassessment.

Conclusion:
The court quashed and set aside the impugned order passed under Section 148A(d) and the notice issued under Section 148 of the Act dated 31st July 2022, on the grounds that the approval was not properly obtained and the reassessment was based on a change of opinion. The court did not consider other grounds raised by the petitioner, leaving them open for consideration in future cases.

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