Court quashes Income Tax Act order due to time limit breach and "change of opinion"

The court quashed the order and notice issued under the Income Tax Act, 1961, as they were found to be beyond the prescribed period and based on a "change of opinion." The assessment for the year 2014-15 was reopened beyond the four-year limit, leading to the court ruling in favor of the petitioner. Consequently, the petition was allowed, and the impugned notice and order were set aside with no order as to costs.

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Issues involved:
The issues involved in the judgment are the quashing of an order and notice issued under the Income Tax Act, 1961, based on objections raised by the petitioner regarding a net loss in foreign exchange derivatives and the re-opening of assessment beyond the prescribed period.

Judgment Summary:

Issue 1: Quashing of Order and Notice
The petitioner filed a petition under Article 226 of the Constitution of India seeking to quash an order dated 9th November, 2021, disposing of objections raised by the petitioner, and an impugned notice issued on 31st March, 2021 under Section 148 of the Income Tax Act, 1961. The petitioner challenged the notice on grounds of being beyond the prescribed period of four years from the end of the Assessment Year and as a case of "change of opinion." The court found that the re-opening of assessment beyond four years was impermissible, and the notice and order were quashed and set aside.

Issue 2: Reopening of Assessment
The Revenue contended that the re-opening of assessment was justified under Explanation-1 of Section 147 of the Act, 1961, as material evidence could not have been discovered earlier. However, the court found that the assessment was reopened for the Assessment Year 2014-15, beyond the four-year limit, and therefore, the petitioner succeeded on this ground. Additionally, the court held that the reassessment exercise was based on a "change of opinion," as the basis for re-opening was the same information provided by the petitioner earlier. Citing precedent, the court ruled in favor of the petitioner on this ground as well.

Conclusion:
The petition was allowed, and the impugned notice dated 31st March, 2021, and the order rejecting objections dated 9th November, 2021 were quashed and set aside. The court made the rule absolute with no order as to costs.

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