Case Note & Summary
The petitioner, Pushpa Nahata, challenged a notice under section 148 of the Income Tax Act, 1961 dated 30 March 2022 and an assessment order dated 22 March 2022 passed under section 147 read with sections 144/144B of the Act. The dispute arose from the assessment year 2014-15. The petitioner had filed a return of income which was processed under section 143(3) of the Act. During that original assessment, the Assessing Officer examined the petitioner's investment in NCL Research and Financial Limited, found it to be bogus, and made an addition of Rs.27,27,657/-. The petitioner had claimed to have purchased 2000 shares in the unlisted company for Rs.3,58,343/- and sold them within two years for Rs.30,86,000/-. The Assessing Officer, relying on a statement of one Narendra Kumar Jain, concluded that the transaction was an accommodation entry. Subsequently, the revenue issued a notice under section 148 seeking to reassess the same income, and passed an ex-parte assessment order under section 144/144B. The petitioner contended that the reassessment was based on the same material already considered in the original assessment and thus amounted to a mere change of opinion, which is impermissible. The court agreed, holding that reassessment under section 147 requires fresh tangible material not previously considered. Since the revenue relied on the same facts and material, the notice and assessment order were quashed. The court allowed the writ petition.
Headnote
A) Income Tax - Reassessment - Section 147/148 Income Tax Act, 1961 - Validity of Reassessment - The court considered whether reassessment proceedings could be initiated on the same material already examined in the original assessment under section 143(3). Held that reassessment requires fresh tangible material and cannot be a mere review of the earlier assessment. The notice and order were quashed as they were based on the same facts and material already considered. (Paras 1-9) B) Income Tax - Assessment - Section 143(3) Income Tax Act, 1961 - Scope of Original Assessment - The original assessment under section 143(3) had examined the issue of the petitioner's investment in NCL Research and Financial Limited and made an addition of Rs.27,27,657/-. The court noted that the reassessment sought to reopen the same issue without any new material. (Paras 2-4) C) Income Tax - Natural Justice - Section 144/144B Income Tax Act, 1961 - Ex-parte Assessment - The assessment order was passed ex-parte under section 144 read with section 144B. The court held that the reassessment was invalid as it lacked jurisdiction due to absence of fresh material. (Paras 1, 9)
Issue of Consideration
Whether the reassessment notice under section 148 and the assessment order under section 147 read with section 144/144B of the Income Tax Act, 1961 are valid when based on the same material already considered in the original assessment under section 143(3).
Final Decision
The court allowed the writ petition and quashed the notice under section 148 dated 30 March 2022 and the assessment order dated 22 March 2022 passed under section 147 read with sections 144/144B of the Income Tax Act, 1961.
Law Points
- Reassessment requires fresh tangible material
- No review on same material
- Section 147/148 Income Tax Act
- 1961
- Section 143(3) Income Tax Act
