Case Note & Summary
The petitioner, Everest Kanto Cylinder Ltd., a public limited company, filed its return of income for Assessment Year 2016-17 on 30 November 2015. The return was processed under Section 143(1) of the Income Tax Act, 1961. Subsequently, the Assessing Officer issued a notice under Section 148 on 27 March 2021 seeking to reopen the assessment. The petitioner filed objections, which were rejected by an order dated 30 November 2021. The petitioner challenged both the notice and the rejection order before the Bombay High Court. The court examined the reasons recorded for reopening and found that they were based on the same material that was already considered during the original assessment. The court noted that there was no fresh tangible material to justify the reopening. The court held that the reassessment was based on a mere change of opinion, which is not permissible under the law. The court also found that the order rejecting objections was non-speaking and did not properly address the petitioner's contentions. Consequently, the court quashed the notice under Section 148 and the order rejecting objections. The rule was made absolute with no order as to costs.
Headnote
A) Income Tax - Reassessment - Section 147/148 of Income Tax Act, 1961 - Reopening of Assessment - The court considered whether the reassessment notice was based on fresh tangible material or mere change of opinion. The court held that the reasons recorded did not disclose any fresh tangible material and the reopening was based on a change of opinion, which is impermissible. The notice and order rejecting objections were quashed. (Paras 1-10) B) Income Tax - Reassessment - Objections - Speaking Order - The court held that the Assessing Officer must pass a speaking order while rejecting objections, and the order must address the objections raised. In this case, the order was found to be non-speaking and was set aside. (Paras 5-10)
Issue of Consideration
Whether the reassessment notice under Section 148 of the Income Tax Act, 1961 and the order rejecting objections are valid when based on a mere change of opinion without any fresh tangible material.
Final Decision
The court quashed the notice dated 27 March 2021 under Section 148 of the Income Tax Act, 1961 and the order dated 30 November 2021 rejecting the petitioner's objections. Rule made absolute with no order as to costs.
Law Points
- Reassessment under Section 147/148 of Income Tax Act
- 1961 requires fresh tangible material
- mere change of opinion is not permissible
- reasons recorded must disclose live link with income escapement
- objections must be considered by speaking order
