Reassessment notice quashed after four years for being based on change of opinion rather than undisclosed material facts

The Bombay HC quashed a reassessment notice issued after four years, holding it was based on change of opinion rather than failure to disclose material facts. The court found that all primary facts were disclosed in the original return and the assessing officer had examined the same issues during original assessment proceedings. Following SC precedents in Gemini Leather Stores and Calcutta Discount Co., the court ruled that once primary facts are disclosed, the assessee's duty is complete and the officer cannot reopen assessment due to his own oversight or different interpretation of disclosed facts.

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Issues involved:
The issues involved in the judgment are the challenge to the action of issuing a notice under Section 148 of the Income Tax Act, 1961 for reassessing income for Assessment Year 2015-16 and the rejection of objections to the notice by the Respondent.

Details of the Judgment:

Challenge to Notice under Section 148:
The Petitioner, engaged in shares and stock broking, challenged the issuance of a notice dated 31st March 2021 under Section 148 of the Income Tax Act, seeking to reassess income for AY 2015-16. An assessment under Section 143(3) of the Act was previously made, determining the total income. The proviso to Section 147 of the Act restricts reassessment after four years from the end of the relevant assessment year, unless there was a failure to disclose material facts. The reasons for reopening were based on records filed by the Petitioner with the return of income. The Court found no failure on the part of the Petitioner to disclose primary facts, leading to the allowance of the petition.

Change of Opinion and Justification:
The Respondent's claim of a factual error coming to notice subsequently, forming the basis for reopening, was deemed a clear case of change of opinion. The Apex Court rulings in Gemini Leather Stores v. ITO and Calcutta Discount Co. Ltd. v. ITO were cited, emphasizing that the duty of the assessee is to disclose all primary relevant facts, and once done, no further assistance is required. The Court held that the Petitioner had fulfilled this duty, and the assessment could not be reopened based on oversight or omission.

Decision and Relief Granted:
The Court allowed the petition, quashing the notice under Section 148 for AY 2015-16, the impugned order, notice for proposed variation, and consequential assessment order along with demand and penalty notices. The Court found no failure on the part of the Petitioner to disclose primary facts, leading to the relief granted in favor of the Petitioner.

Conclusion:
The judgment addressed the challenge to the notice under Section 148 of the Income Tax Act, emphasizing the importance of full and truthful disclosure of primary facts by the assessee. The Court ruled in favor of the Petitioner, highlighting the lack of justification for the reassessment based on a change of opinion and the absence of failure to disclose material facts.

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