Reassessment notice under Section 148 quashed for limitation, invalid DIN, wrong officer issuance, and impermissible opinion change

The Bombay HC quashed a reassessment notice dated 27th August 2022 issued under Section 148 on multiple grounds. The court held that TOLA provisions were not applicable for Assessment Year 2015-2016, and the notice was barred by limitation even after excluding specified periods. The notice was invalid for lacking a DIN and being issued by JAO instead of FAO under the faceless assessment scheme. The court found no valid reason to believe income had escaped assessment regarding Section 80JJAA deduction claims, as the original assessment had allowed these deductions. The reassessment constituted an impermissible change of opinion since the assessing officer had previously accepted the deduction claims with proper documentation.

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Issues Involved:
1. Applicability of TOLA for Assessment Year 2015-2016.
2. Limitation of notice dated 27th August 2022 under Section 148.
3. Validity of the notice dated 27th August 2022 without a DIN.
4. Validity of the notice dated 27th August 2022 issued by JAO under Section 151A.
5. Alleged escapement of income represented in the form of an asset or expenditure.
6. Reopening based on change of opinion.
7. Consistent allowance of deduction under Section 80JJAA.
8. Validity of the approval granted by the Sanctioning Authority.

Detailed Analysis:

1. Applicability of TOLA for Assessment Year 2015-2016:
The court held that TOLA is not applicable for Assessment Year 2015-2016. This conclusion was supported by previous judgments, including Tata Communications Transformation Services Ltd. and Siemens Financial Services (P.) Ltd. The court emphasized that TOLA cannot be used to justify the impugned notice under Section 148 as being within the period of limitation.

2. Limitation of Notice Dated 27th August 2022:
The notice dated 27th August 2022 was found to be barred by limitation as per the first proviso to Section 149 of the Act. The court clarified that the term "at that time" refers to the date on which the notice under Section 148 is issued. Since the notice was issued beyond the six-year limit for Assessment Year 2015-2016, it was deemed invalid.

3. Validity of the Notice Dated 27th August 2022 Without a DIN:
The notice was invalid and bad in law as it was issued without a DIN. The court referred to CBDT Circular No. 19 of 2019, which mandates that any communication without a DIN is invalid. The separate intimation letter dated 27th August 2022 could not validate the notice as it referred to a different date and did not comply with the prescribed procedure.

4. Validity of the Notice Dated 27th August 2022 Issued by JAO:
The notice was invalid as it was not issued in accordance with Section 151A of the Act. The court noted that the Scheme dated 29th March 2022 framed under Section 151A mandates that notices under Section 148 should be issued through automated allocation and in a faceless manner. The notice issued by JAO did not comply with this requirement.

5. Alleged Escapement of Income Represented in the Form of an Asset:
The issues raised in the impugned order did not show an alleged escapement of income represented in the form of an asset or expenditure as required in Section 149(1)(b) of the Act. The court found that the alleged escapement of income pertained to the correctness of the claim of deduction, which does not fall under the categories specified in Section 149(1)(b).

6. Reopening Based on Change of Opinion:
The court held that respondent no. 1 has no power to review his own assessment when the same information was provided and considered during the original assessment proceedings. The reopening was based on a change of opinion, which is not permissible even under the new provisions. The claim of deduction under Section 80JJAA was allowed in previous years, and the present case was deemed a clear case of change of opinion.

7. Consistent Allowance of Deduction Under Section 80JJAA:
The court noted that the claim of deduction under Section 80JJAA had been consistently allowed to the petitioner since Assessment Year 2010-2011. Therefore, the Assessing Officer could not allege that income chargeable to tax had escaped assessment on account of such a claim being allowed for Assessment Year 2015-2016.

8. Validity of the Approval Granted by the Sanctioning Authority:
The court found that the approval granted by the Sanctioning Authority was valid. There was no evidence to suggest non-application of mind by the approving authority.

Conclusion:
The court ruled in favor of the petitioner, making the rule absolute in terms of prayer clause (a), thereby quashing and setting aside the impugned initial notice dated 25th May 2022, the impugned order dated 26th August 2022, and the impugned notice dated 27th August 2022.

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