Case Note & Summary
The petitioner, CitiusTech Healthcare Technology Pvt. Ltd., filed a writ petition challenging a notice dated 27 March 2021 issued under Section 148 of the Income-tax Act, 1961 (the Act) by the Deputy Commissioner of Income Tax, Circle-1(2)(1), Mumbai, seeking to reopen the assessment for Assessment Year (AY) 2015-16. The petitioner also challenged the order dated 22 March 2022 rejecting its objections to the reopening. The original assessment for AY 2015-16 was completed under Section 143(3) of the Act on 29 December 2017, accepting the petitioner's claim for deduction under Section 10AA of the Act. The reopening notice was issued beyond four years from the end of the relevant assessment year, i.e., on 27 March 2021. The reasons recorded for reopening stated that the Assessing Officer (AO) had not examined the claim under Section 10AA properly and that the deduction was allowed without verifying the conditions. The petitioner contended that the reopening was based on a mere change of opinion and that there was no allegation of failure to disclose material facts, which is required under the proviso to Section 147 for reopening beyond four years. The respondents argued that the AO had not applied his mind during the original assessment and that the reopening was justified. The court examined the reasons recorded and found that they did not allege any failure on the part of the petitioner to disclose material facts. The court noted that the original assessment was completed after scrutiny and the AO had examined the claim under Section 10AA. The reopening was based on a reappraisal of the same material, which amounted to a change of opinion. The court held that the proviso to Section 147 requires that for reopening beyond four years, there must be a failure to disclose material facts, and in the absence of such an allegation, the reopening is invalid. The court quashed the notice under Section 148 and the order rejecting objections, allowing the petition.
Headnote
A) Income Tax - Reopening of Assessment - Section 147, 148, 149 Income-tax Act, 1961 - Reopening beyond four years - The petitioner challenged notice under Section 148 and order rejecting objections for AY 2015-16. The court held that since the original assessment was completed under Section 143(3) and the reopening was beyond four years, the proviso to Section 147 requires that there must be failure to disclose material facts. The reasons recorded did not allege any such failure and were based on reappraisal of the same material. Held that the reopening is invalid and the notice and order are quashed. (Paras 1-17) B) Income Tax - Change of Opinion - Section 147 Income-tax Act, 1961 - Reopening based on change of opinion - The Assessing Officer had examined the issue of deduction under Section 10AA during original assessment and accepted the claim. The reopening reasons merely sought to re-examine the same issue without any new material. Held that reopening on change of opinion is not permissible. (Paras 10-15)
Issue of Consideration
Whether the notice issued under Section 148 of the Income-tax Act, 1961 for reopening of assessment for AY 2015-16 beyond four years from the end of the relevant assessment year is valid when there is no allegation of failure to disclose material facts and the reasons are based on reappraisal of the same material already considered in the original assessment.
Final Decision
The court allowed the petition, quashing the notice dated 27 March 2021 under Section 148 and the order dated 22 March 2022 rejecting objections. Rule made absolute.
Law Points
- Reopening of assessment beyond four years requires failure to disclose material facts
- Reappraisal of same material not permissible
- Section 148 notice based on change of opinion invalid
