2024 (10) TMI 1582 - HC - Income Tax

Notice under Section 148 quashed for lacking fresh tangible material beyond original assessment records

The Gujarat HC quashed a notice issued under section 148 for reopening assessment under section 147. The court held that the AO could not assume ... Reopening of assessment u/s 147 - assessment order u/s 143 (3) wherein no addition was made on the issue of tax deducted at source and cash deposits - HELD THAT:- It is not in dispute that the petitioner has filed reply to the notice issued u/s 142 (1) of the Act during the regular course of assessment and after considering the same, the assessment order was passed u/s 143 (3) of the Act. On a bare perusal of the reasons recorded, it is apparent that the respondent AO has assumed jurisdiction on perusal of the assessment record, in absence of any fresh tangible material which was not considered during the course of regular assessment proceedings which would amount to mere change of opinion. Therefore, as held in case of Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT] the AO could not have assumed the jurisdiction to reopen the assessment. In view of above settled legal position, the petition succeeds and is accordingly allowed. Impugned notice issued u/s 148 of the Act is hereby quashed and set aside. Issues:Challenge to jurisdiction of Assessing Officer to issue notice under section 148 of the Income Tax Act, 1961 for Assessment Year 2017-2018.Analysis:The petitioner challenged the jurisdiction of the Assessing Officer to issue a notice under Article 226 of the Constitution of India for Assessment Year 2017-2018. The petitioner argued that the Assessing Officer did not have the authority to reopen the assessment as the same material was considered during the regular assessment. The petitioner contended that the notice was a mere change of opinion and a fishing expedition, citing relevant case laws to support their argument.The petitioner filed preliminary objections challenging the validity of the notice issued under section 148 of the Act, stating that no order disposing of the objections was received. The petitioner emphasized the necessity of disposing of objections before proceeding with the assessment, relying on various legal precedents to support their stance.The respondent, on the other hand, argued that the reopening was within the four-year period and justified based on the information available on record. The respondent highlighted that the Assessing Officer had reasonable grounds to believe that income had escaped assessment, particularly due to the auditor's report of less deduction of tax.The Court observed that the Assessing Officer had assumed jurisdiction based on the assessment record without any fresh tangible material, amounting to a mere change of opinion. Citing the case of Commissioner of Income tax v. Kelvinator of India Ltd., the Court held that post-April 1, 1989, the power to reopen assessments is broader but must be based on a reason to believe that income has escaped assessment, not on a mere change of opinion.In light of the legal position, the Court allowed the petition, quashing the notice issued under section 148 of the Act and setting aside the order disposing of objections for reassessment. The Court concluded the judgment by making the rule absolute to the extent mentioned, with no order as to costs.