Case Note & Summary
The petitioner, Bajaj Energy Limited, a company engaged in energy business, filed its return of income for Assessment Year 2014-15 on 30th November 2014 declaring total income of Rs. 1,01,63,86,870/-. The return was processed under Section 143(1) and later selected for scrutiny under Section 143(2). During the scrutiny assessment, the Assessing Officer examined various issues including the claim of deduction under Section 80-IA of the Income Tax Act, 1961 in respect of a windmill. The assessee provided all details and explanations. The assessment was completed under Section 143(3) on 29th December 2016 accepting the returned income. Subsequently, on 21st January 2022, the Assessing Officer issued a notice under Section 148 of the Act seeking to reopen the assessment on the ground that the assessee had claimed deduction under Section 80-IA in respect of a windmill which was not eligible as per the provisions. The petitioner challenged the notice on the ground that it was issued beyond the period of four years from the end of the relevant assessment year and that there was no failure to disclose material facts. The court held that the notice was barred by limitation as the proviso to Section 147 applied, requiring that for reopening after four years, there must be a failure on the part of the assessee to disclose fully and truly all material facts. Since the assessee had disclosed all details during the original assessment, the reopening was not valid. The court also noted that the reopening was based on a change of opinion as the same issue was examined during the original assessment. The writ petition was allowed and the notice under Section 148 was quashed.
Headnote
A) Income Tax - Reopening of Assessment - Section 148, Income Tax Act, 1961 - Limitation - Notice issued beyond four years from end of relevant assessment year - Assessee had disclosed all material facts - No failure to disclose - Reopening based on non-escapement of income - Held that notice was barred by limitation and liable to be quashed (Paras 1-10). B) Income Tax - Reopening of Assessment - Section 147, Income Tax Act, 1961 - Change of Opinion - Reassessment sought on same material already considered - No new tangible material - Held that reopening on change of opinion is impermissible (Paras 5-10).
Issue of Consideration
Whether the notice under Section 148 of the Income Tax Act, 1961 for reopening of assessment was valid when the assessee had disclosed all material facts during the original assessment and the notice was issued beyond the limitation period.
Final Decision
The writ petition is allowed. The notice dated 21st January 2022 under Section 148 of the Income Tax Act, 1961 is quashed and set aside. Rule is made absolute in those terms.
Law Points
- Reopening of assessment
- limitation period
- Section 148 notice
- Income Tax Act
- 1961
- non-escapement of income
- full disclosure
- change of opinion
