Case Note & Summary
The petitioner, DCB Bank Ltd., challenged a notice dated 24 March 2021 issued under Section 148 of the Income Tax Act, 1961 for reopening the assessment for Assessment Year 2014-15, and an order dated 13 January 2022 rejecting its objections. The bank had originally filed its return on 27 November 2014 declaring nil income after setting off brought forward losses, along with audited accounts and tax audit report. The assessment was completed under Section 143(3) on 30 December 2016. Subsequently, the Assessing Officer issued the impugned notice on the ground that the bank had claimed deduction under Section 36(1)(viia) in respect of certain rural branches which were not eligible. The petitioner filed objections contending that the reopening was based on a change of opinion and lacked fresh material. The Assessing Officer rejected the objections by a brief order. The court examined the reasons recorded for reopening and found that they merely referred to the claim made in the return and the audit report, without pointing to any new information or material that was not considered during the original assessment. The court held that the Assessing Officer had not formed a fresh 'reason to believe' based on tangible material, and the reopening was a clear case of change of opinion. The order rejecting objections was also held to be non-speaking and unsustainable. Consequently, the court quashed the notice and the order, allowing the writ petition.
Headnote
A) Income Tax - Reassessment - Section 147/148 of Income Tax Act, 1961 - Reopening of Assessment - The Assessing Officer issued notice under Section 148 based on reasons that the petitioner had claimed deduction under Section 36(1)(viia) in respect of certain rural branches which were not eligible. The court held that the reasons did not disclose any new tangible material and were merely a change of opinion, as the original assessment had already examined the claim. The notice and the order rejecting objections were quashed. (Paras 1-18) B) Income Tax - Objections - Speaking Order - Section 148 of Income Tax Act, 1961 - The Assessing Officer rejected the petitioner's objections by a non-speaking order without addressing the specific contentions raised. The court held that the order was unsustainable as it failed to provide reasons and did not consider the petitioner's submissions. (Paras 13-18)
Issue of Consideration
Whether the reassessment notice under Section 148 of the Income Tax Act, 1961 for Assessment Year 2014-15 was valid when based on the same material already considered during original assessment, and whether the order rejecting objections was sustainable.
Final Decision
Writ Petition allowed. Notice dated 24 March 2021 under Section 148 and order dated 13 January 2022 rejecting objections are quashed and set aside.
Law Points
- Reassessment under Section 147/148 of Income Tax Act
- 1961 requires tangible new material
- Change of opinion not permissible
- Reasons to believe must be based on fresh facts
- Duty of Assessing Officer to disclose reasons
- Objections must be disposed by speaking order
