Income Tax Officer cannot reopen assessment based on mere change of opinion when all facts disclosed

The Bombay HC quashed the reopening notice and order disposing objections in a case involving capital gains assessment. The original assessment under section 143(3) was completed assessing income at Rs. 82,07,933/- against disclosed income of Rs. 81,23,993/-. The petitioner had fully disclosed all material facts and responded to queries during assessment proceedings regarding capital gains from property sale. The court found the reopening was based merely on change of opinion by the Assessing Officer without valid reason to believe income had escaped assessment, citing Calcutta Discount Co. Ltd. precedent. The petition was allowed in favor of the assessee.

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Issues involved:
The judgment involves challenging a notice under section 148 of the Income Tax Act, 1961 and the order disposing objections to the reopening of assessment for the assessment year 2012-13.

Details of the judgment:
1. The petitioner, who was the Managing Director of a company, filed an income tax return for the assessment year 2012-13. The assessment was completed under section 143(3) of the Income Tax Act, with the income assessed at Rs. 82,07,933.

2. The petitioner received a notice under section 148 of the Income Tax Act, stating that there were reasons to believe the income had escaped assessment due to incorrect exemption claimed under section 54B. The assessing officer believed that the petitioner was not eligible for the exemption claimed.

3. The petitioner argued that there was no failure to disclose fully and truly all material facts necessary for assessment. It was highlighted that during the assessment proceedings, a query was raised regarding the capital gain on the sale of a property, and the petitioner had responded to this query with relevant details.

4. The court noted that the reasons for reopening the assessment were based on records available with the petitioner and there was no indication of any failure to disclose material facts. The court emphasized that the assessing officer's allegations were merely an attempt to bypass legal requirements.

5. It was further pointed out that even though the query raised during assessment proceedings was not explicitly mentioned in the assessment order, it did not mean that the matter was not considered. The court cited a previous judgment to support this view.

6. The court concluded that the reopening of the assessment was merely a change of opinion by the assessing officer and did not constitute valid reasons to believe that income had escaped assessment. As a result, the court quashed the notice under section 148 and the order disposing objections to the reopening of assessment.

7. The court granted the petitioner's prayer to issue a Writ of Certiorari to quash and set aside the impugned notice and the subsequent order disposing of objections.

Conclusion:
The High Court of Bombay quashed the notice under section 148 of the Income Tax Act, 1961, and the order disposing objections to the reopening of assessment for the assessment year 2012-13, based on the lack of valid reasons to believe that income had escaped assessment.

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