Case Note & Summary
The petitioner, Gandhibag Sahakari Bank Limited, a co-operative bank, challenged a notice dated 31.03.2021 issued under Section 148 of the Income Tax Act, 1961 seeking to reassess its income for assessment year 2017-18. The bank had filed its return on 24.10.2017, which was selected for limited scrutiny. During scrutiny, the Assessing Officer issued notices under Sections 143(2) and 142(1) specifically seeking details of cash deposits made during the demonetization period. The bank responded by providing comprehensive information including details of customers, bank statements, tax audit report, and balance sheet. The bank explained that being a banking entity, it accepted old currency notes and deposited them with the Reserve Bank of India. After considering these submissions, the assessment was completed under Section 143(3) on 30.12.2019. Subsequently, the Assessing Officer issued the impugned notice under Section 148, stating that income had escaped assessment because the cash deposits during demonetization required further examination. The bank contended that the notice was based on a mere change of opinion as the same issue had already been examined during the original assessment. The court analyzed the facts and found that the Assessing Officer had indeed examined the cash deposits during the original scrutiny and had not recorded any fresh tangible material before issuing the reassessment notice. The court held that reopening on the same issue without new material is impermissible and amounts to a change of opinion. Consequently, the court quashed the notice and allowed the writ petition.
Headnote
A) Income Tax - Reassessment - Section 148 of Income Tax Act, 1961 - Reopening of Assessment - The Assessing Officer issued notice under Section 148 to reassess income of a co-operative bank for AY 2017-18 on the ground that cash deposits during demonetization required further examination. The court held that since the same issue was already examined in the original scrutiny assessment under Section 143(2) and the petitioner had furnished all details, the notice was based on mere change of opinion and lacked fresh tangible material. The court quashed the notice. (Paras 2-10) B) Income Tax - Change of Opinion - Section 147 of Income Tax Act, 1961 - Reassessment - The court reiterated that after completion of scrutiny assessment, reopening on the same issue without any new material is impermissible as it amounts to change of opinion. The Assessing Officer must have reason to believe based on fresh tangible material. (Paras 8-10)
Issue of Consideration
Whether the notice issued under Section 148 of the Income Tax Act, 1961 for reopening assessment was valid when the Assessing Officer had already examined the issue of cash deposits during demonetization in the original scrutiny assessment and had not recorded any fresh tangible material.
Final Decision
The court allowed the writ petition and quashed the notice dated 31.03.2021 issued under Section 148 of the Income Tax Act, 1961.
Law Points
- Reassessment notice under Section 148 of Income Tax Act
- 1961 requires fresh tangible material
- Change of opinion not permissible after scrutiny assessment
- Co-operative Bank's cash deposits during demonetization explained in original assessment
