2024 (10) TMI 104 - HC - Income Tax

Assessment reopening quashed as AO's change of opinion lacks merit under section 147

HC quashed reopening notice u/s 147 for AY 2017-18. Petitioner's assessment was completed u/s 143(3) after furnishing all materials including detailed ... Reopening of assessment u/s 147 - specific case of the petitioner is that the assessment was completed earlier u/s 143(3) wherein, the claim of the petitioner in respect of bad debts and advance written off were not disturbed - HELD THAT:- The records reveal that the petitioner had furnished all the materials for completing the assessment on 17.12.2019 u/s 143(3) of the Act. In fact in response to the notice dated 30.11.2019 issued under Section 142(1) of the Act. These information’s were furnished by the petitioner by a detailed note on 09.12.2019. Therefore, it is clear that the reasons given for reopening the assessment is inspired from change of opinion by the AO. Therefore, there is no merits in the Impugned Notice and the Impugned Order for the Assessment Year 2017-2018. These writ petitions deserve to be allowed and are therefore accordingly allowed. Issues:Challenge to Impugned Notice dated 29.03.2021 under Section 148 of the Income Tax Act, 1961 for Assessment Year 2017-2018 and Impugned Order dated 22.02.2022. Allegation of impermissible reopening of assessment and change of opinion by Assessing Officer.Analysis:The petitioner contested the Impugned Notice issued under Section 148 of the Income Tax Act, 1961 for the Assessment Year 2017-2018, claiming that the assessment completed earlier under Section 143(3) did not disturb the claims of bad debts and advance written off. The petitioner provided detailed information in response to a notice under Section 142(1) of the Act, including specifics on bad debts and advance written off. Despite this, the second respondent proceeded to issue the Impugned Notice, citing impermissible reasons for reopening the assessment based on the profit and loss account. The petitioner argued that this contravened established legal precedents, such as the decision of the Hon'ble Supreme Court in Commissioner of Income Tax Vs. Kelvinator of India Ltd. The petitioner also referenced a similar case before the Bombay High Court where the writ petition was allowed, emphasizing that no new information had come to light to justify the reassessment.The respondents contended that the writ petitions were premature and not solely based on a change of opinion. They relied on Explanation 1 to Section 147 of the Act, asserting that mere production of account books or evidence that could have been discovered earlier would not constitute disclosure under the Act. The court considered arguments from both sides and noted that the petitioner had provided all necessary materials for the initial assessment under Section 143(3) of the Act. The court highlighted that the reasons for reopening the assessment seemed to stem from a change of opinion by the Assessing Officer, rather than new information. Consequently, the court found no merit in the Impugned Notice and Order for the Assessment Year 2017-2018, ruling in favor of the petitioner and allowing the writ petitions. No costs were awarded, and connected Writ Miscellaneous Petitions were closed.