Case Note & Summary
The petitioner, a registered cooperative credit society formed by licensees of a municipal market, was assessable as an Association of Persons. However, due to a mistake at the time of formation, it was registered as a Trust for PAN purposes. For Assessment Year 2011-12, the Assessing Officer passed an ex-parte assessment order dated 28 December 2018 raising a demand of Rs. 3,80,96,940 on the entire corpus of the society. The petitioner challenged this order before the Commissioner of Income Tax (Appeals) [CIT(A)], who set aside the assessment and remanded the matter back to the Assessing Officer. The Revenue appealed to the Income Tax Appellate Tribunal (ITAT), which dismissed the appeal and upheld the CIT(A)'s order. Subsequently, for Assessment Year 2019-20, the Assessing Officer issued a notice under Section 148 of the Income Tax Act, 1961 on 31 March 2023, along with an order under Section 148A(d) dated 29 March 2023, seeking to reopen the assessment. The petitioner filed a writ petition under Article 226 of the Constitution challenging these notices and the assessment proceedings. The main legal issue was whether the reassessment could be based on the same material that had already been considered and set aside by the appellate authorities for a prior year. The petitioner argued that there was no fresh tangible material and that the reopening was merely a change of opinion. The respondents contended that the material was different and that the reopening was justified. The court analyzed the reasons recorded and found that the Assessing Officer had merely relied on the earlier assessment order for AY 2011-12, which had been set aside. The court held that without any fresh tangible material, the reason to believe that income had escaped assessment was not valid. The court quashed the impugned notice under Section 148, the order under Section 148A(d), and all assessment proceedings in furtherance thereof. Rule was made absolute with no order as to costs.
Headnote
A) Income Tax - Reassessment - Section 148 of Income Tax Act, 1961 - Reopening of Assessment - The petitioner, a cooperative credit society, challenged a notice under Section 148 for AY 2019-20 and the order under Section 148A(d). The Assessing Officer had earlier made an ex-parte assessment for AY 2011-12 on the entire corpus of the society, which was set aside by the CIT(A) and ITAT. The court held that the reassessment notice was based on the same material that had already been considered and set aside, and there was no fresh tangible material to justify reopening. The court quashed the notice and proceedings. (Paras 1-10) B) Income Tax - Section 148A(d) Order - Validity - The order under Section 148A(d) was passed without independent application of mind and merely reiterated the reasons recorded for reopening. The court held that such an order cannot sustain when the underlying material is stale and already adjudicated. (Paras 5-10)
Issue of Consideration
Whether a reassessment notice under Section 148 of the Income Tax Act, 1961 can be issued based on the same material that was already considered and set aside by the Income Tax Appellate Tribunal (ITAT) in a prior assessment year, and whether the Assessing Officer had any fresh tangible material to form a reason to believe that income had escaped assessment.
Final Decision
The court allowed the petition, quashed the impugned notice under Section 148 of the Income Tax Act, 1961 dated 31 March 2023, the order under Section 148A(d) dated 29 March 2023, and all assessment proceedings in furtherance thereof. Rule was made absolute with no order as to costs.
Law Points
- Reassessment notice under Section 148 of Income Tax Act
- 1961 cannot be based on same material that was already considered and set aside by appellate authority
- Lack of fresh tangible material renders reopening invalid
- Section 148A(d) order must be based on independent application of mind
