Case Note & Summary
The petitioner, Shivam Ispat Private Limited, filed its income tax return for Assessment Year 2016-2017 declaring total income of Rs.32,58,510/-. The case was selected for limited scrutiny, and notices under Sections 143(2), 129, and 142(1) of the Income Tax Act, 1961 were issued. A show cause notice dated 26.11.2018 alleged clandestine sales of Rs.3,07,96,304/- to M/s Sahanu Sponge and Power Ltd and M/s Ambey Metallic Limited. The petitioner replied denying the allegations. The Assessing Officer, by order dated 28.12.2018, concluded that there were clandestine sales and added a gross profit of Rs.3,07,963/- at 1% rate, computing tax and issuing penalty notice under Section 274 read with Section 271(1)(c). The petitioner filed an appeal against this assessment. Subsequently, the respondent issued a notice under Section 148 dated 27.3.2021 seeking to reassess the income for the same assessment year. The petitioner filed objections, which were rejected by order dated 2.2.2022. The petitioner then filed the present writ petition challenging the reassessment notice and the rejection order on the ground that the reopening was based on a change of opinion, as the issue of clandestine sales had already been examined and decided in the original assessment. The court analyzed the facts and found that the reassessment notice was based on the same material that was considered during the original assessment. The court held that reopening on the same material without any new tangible material constitutes a change of opinion, which is impermissible under law. The court quashed the reassessment notice and the order rejecting objections, allowing the petition.
Headnote
A) Income Tax - Reassessment - Change of Opinion - Section 148, Income Tax Act, 1961 - The court considered whether the reassessment notice was based on a change of opinion. The original assessment had examined the issue of alleged clandestine sales and added a gross profit. The reassessment sought to reopen on the same issue without new material. Held that reopening based on the same material constitutes a change of opinion and is impermissible (Paras 4-12).
Issue of Consideration
Whether the reassessment notice under Section 148 of the Income Tax Act, 1961 for Assessment Year 2016-2017 was based on a change of opinion and thus impermissible in law.
Final Decision
The court allowed the writ petition, quashing the reassessment notice dated 27.3.2021 and the order dated 2.2.2022 rejecting objections.
Law Points
- Change of opinion
- Reassessment
- Section 148
- Income Tax Act
- 1961
- Jurisdiction
- Notice validity
Case Details
2024 LawText (BOM) (03) 152
WRIT PETITION NO.58 OF 2022
M. S. Sonak, Avinash G. Gharote
Parag Rao, Akhil Parrikar, Susan Linhares
Shivam Ispat Private Limited
Union of India, Ministry of Finance, Income Tax Department, National Faceless Assessment Centre-Delhi; Assistant Commissioner of Income Tax, National Faceless Assessment Centre, Delhi
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Nature of Litigation
Writ petition challenging reassessment notice under Section 148 of the Income Tax Act, 1961 and order rejecting objections.
Remedy Sought
Petitioner sought quashing of the reassessment notice dated 27.3.2021 and the order dated 2.2.2022 rejecting objections.
Filing Reason
Petitioner contended that the reassessment was based on a change of opinion, as the issue of alleged clandestine sales had already been examined and decided in the original assessment.
Previous Decisions
Original assessment order dated 28.12.2018 added gross profit on alleged clandestine sales; appeal filed by petitioner against that order.
Issues
Whether the reassessment notice under Section 148 of the Income Tax Act, 1961 for Assessment Year 2016-2017 was based on a change of opinion and thus impermissible.
Submissions/Arguments
Petitioner argued that the reassessment was based on the same material considered in the original assessment, constituting a change of opinion, which is impermissible.
Respondent argued that the reassessment was justified as there was reason to believe that income had escaped assessment.
Ratio Decidendi
Reopening of assessment under Section 148 of the Income Tax Act, 1961 based on the same material that was considered during the original assessment constitutes a change of opinion and is impermissible in law.
Judgment Excerpts
The petition questions the order dated 2.2.2022 passed by the respondent no.2 rejecting of the objections raised by the petitioner to the issuance of the notice under Section 148 of the Income Tax Act and the subsequent notice dated 27.3.2021, on the ground that the order of re-assessment of income tax for the Assessment Year 2016-2017, is not on account of any mistake, but is on account of change of opinion, which is impermissible in law.
Procedural History
Petitioner filed return for AY 2016-2017; scrutiny assessment under Section 143(2) conducted; show cause notice issued; assessment order dated 28.12.2018 passed adding gross profit; petitioner filed appeal; reassessment notice under Section 148 dated 27.3.2021 issued; petitioner filed objections; objections rejected by order dated 2.2.2022; petitioner filed writ petition on 2022; heard and disposed on 20.3.2024.
Acts & Sections
- Income Tax Act, 1961: 148, 143(2), 129, 142(1), 274, 271(1)(c)
