Reassessment notices under Section 148 quashed for lack of fresh tangible material beyond original assessment disclosures

Gujarat HC quashed reassessment notices under Section 148 issued based on survey of Jammu Kashmir Bank. The assessee had disclosed all foreign exchange transactions and bank details during original assessment. The bank's survey report showed two different remittance calculations - notional and actual realization rates. Since the assessee had already provided complete documentation including bank statements, exchange differences, and Form-15CA during original proceedings, the AO lacked fresh tangible material to form prima facie belief of income escapement. The reassessment constituted mere change of opinion without new evidence. Appeal allowed.

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Issues Involved:
1. Validity of notice issued u/s 148 of the Income Tax Act, 1961 for A.Ys. 2016-17 and 2017-18.

Summary:

1. Validity of Notice Issued u/s 148:
The petitioner challenged the notice dated 30th March 2021 issued by the respondent u/s 148 of the Income Tax Act, 1961 for A.Ys. 2016-17 and 2017-18. The petitioner argued that all requisite details were furnished during the regular assessment, and there was no fresh material to form a reasonable belief that income had escaped assessment. The respondent issued the notice based on a survey action u/s 133A conducted on Jammu & Kashmir Bank, which revealed discrepancies in remittance amounts due to differences between notional and actual settlement rates.

2. Petitioner's Arguments:
The petitioner contended that the survey report from Jammu & Kashmir Bank, which explained the differences in remittance amounts, could not be treated as tangible material for reopening the assessment. The petitioner had already provided all relevant details during the original assessment, and the assessment order u/s 143(3) was passed without objections.

3. Respondent's Arguments:
The respondent argued that the reopening of the assessment was within four years, and fresh material in the form of a survey report from Jammu & Kashmir Bank justified the reopening. They claimed that the mismatch in remittance amounts needed to be clarified during reassessment proceedings.

4. Court's Analysis:
The court noted that the Assessing Officer issued the notice based on the survey action conducted after the original assessment order. The explanation provided by Jammu & Kashmir Bank clarified the differences in remittance amounts due to notional and actual settlement rates. The court found that the petitioner had already produced all relevant material during the original assessment, and the Assessing Officer had not applied his mind to this material.

5. Conclusion:
The court concluded that the impugned notice u/s 148 amounted to a change of opinion without any fresh tangible material. The case was covered by the decision of the Hon'ble Apex Court in Commissioner of Income Tax v. Kelvinator of India Ltd., which held that a mere change of opinion cannot justify reopening an assessment. Therefore, the court quashed and set aside the impugned notices u/s 148 of the Act.

Final Judgment:
The petitions were allowed, and the impugned show cause notices u/s 148 of the Act were quashed and set aside. No order as to costs.

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