Case Note & Summary
The petitioner, Survival Technologies Pvt. Ltd., filed a writ petition challenging a notice dated 30 March 2021 issued under section 148 of the Income Tax Act, 1961 seeking to reopen its assessment for the assessment year 2015-16, and also challenging the order dated 21 July 2022 disposing of its objections to the reopening. The petitioner had originally filed its return of income for AY 2015-16, which was selected for scrutiny assessment under CASS. Notices under sections 143(2) and 142(1) were issued, and the petitioner provided all necessary information, including its claim for deduction under section 35(2AB) of the Act. An assessment order under section 143(3) was passed on 13 June 2017, assessing total income at Rs.8,48,00,190/- by disallowing Rs.32,70,724/- as excess deduction claimed under section 35(2AB). This disallowance was later reduced to Rs.16,35,262/- via a rectification order under section 154 dated 23 June 2017. Subsequently, on 30 March 2021, the Assessing Officer issued a notice under section 148 seeking to reopen the assessment on the ground that income chargeable to tax had escaped assessment. The petitioner filed objections, which were rejected by the order dated 21 July 2022. The petitioner then approached the High Court. The court examined the reasons recorded for reopening and found that the reopening was based on the same claim for deduction under section 35(2AB) that had already been examined and disallowed during the original assessment. The court noted that the Assessing Officer had considered the claim and made a disallowance, and the reopening notice did not disclose any fresh tangible material. The court held that the reopening was based on a mere change of opinion, which is not permissible under law. The court relied on the principle that once an assessment under section 143(3) is completed, the Assessing Officer cannot reopen the assessment on the same set of facts and material unless there is new information. The court quashed the notice under section 148 and the order disposing of objections, allowing the writ petition.
Headnote
A) Income Tax - Reassessment - Section 148 of Income Tax Act, 1961 - Reopening of Assessment - The petitioner challenged a notice under section 148 seeking to reopen assessment for AY 2015-16 on the ground that the notice was based on the same material already considered during the original scrutiny assessment under section 143(3). The court held that a reassessment notice cannot be issued on the same material that was already examined and considered in the original assessment, as it would amount to a mere change of opinion, which is not permissible under law. The court quashed the notice and the order disposing of objections. (Paras 1-9) B) Income Tax - Change of Opinion - Section 148 of Income Tax Act, 1961 - Reassessment - The court held that the Assessing Officer had examined the claim for deduction under section 35(2AB) during the original assessment and had made a disallowance. The reopening notice was based on the same claim and material, which constituted a change of opinion. The court reiterated that a change of opinion cannot be a valid ground for reopening an assessment under section 148. (Paras 5-9)
Issue of Consideration
Whether a notice under section 148 of the Income Tax Act, 1961 for reopening an assessment can be sustained when it is based on the same material that was already considered during the original scrutiny assessment under section 143(3).
Final Decision
The court allowed the writ petition, quashing the notice dated 30 March 2021 under section 148 of the Income Tax Act, 1961 and the order dated 21 July 2022 disposing of objections.
Law Points
- Reassessment notice under section 148 cannot be issued on the same material considered during original scrutiny assessment
- Change of opinion does not justify reopening
- Section 148 notice must be based on fresh tangible material
- Section 143(3) assessment cannot be reopened without new information
