Case Note & Summary
The petitioner, Shrikant Phulchand Bhakkad (HUF), through its Karta, filed a writ petition under Article 226 of the Constitution of India challenging a notice dated 31 March 2021 issued under Section 148 of the Income Tax Act, 1961 by the Income Tax Officer, Ward-1, Jalna (respondent No. 2), and an order dated 2 December 2021 passed by the Income Tax Officer, National Faceless Assessment Centre, Delhi (respondent No. 3) rejecting the petitioner's objections. The dispute pertained to the Assessment Year 2016-2017. The petitioner had filed its return of income claiming a loss from derivative transactions. The original assessment was completed on 25 December 2018 after the Assessing Officer had called for and examined all relevant documents, including account statements, demat account details, broker details, and contract notes. The Assessing Officer accepted the loss claimed. Subsequently, on 31 March 2021, the respondent No. 2 issued a notice under Section 148 on the same set of facts, initiating reassessment proceedings under Section 147. The petitioner received the reasons recorded and filed objections on 19 July 2021, contending that the notice was based on a change of opinion and was without jurisdiction. The respondent No. 3 rejected the objections by order dated 2 December 2021. The petitioner argued that the reassessment notice was invalid as it was a mere change of opinion on the same material already considered during the original assessment. The respondents contended that the reassessment was justified. The Court, after hearing both sides, held that the Assessing Officer had already examined the derivative transaction during the original assessment and accepted the loss after full inquiry. The reassessment notice was based on the same material and thus amounted to a change of opinion, which is not permissible. The Court quashed the notice dated 31 March 2021 and the order dated 2 December 2021, and allowed the petition.
Headnote
A) Income Tax - Reassessment - Change of Opinion - Sections 147, 148, Income Tax Act, 1961 - The Assessing Officer issued notice under Section 148 for reassessment of loss claimed from derivative transactions for Assessment Year 2016-2017, after the original assessment had accepted the loss after full inquiry. The petitioner objected on the ground of change of opinion. The Court held that the reassessment notice was based on the same material already considered, and thus amounted to a mere change of opinion, which is not permissible under law. The notice and the order rejecting objections were quashed. (Paras 2-5)
Issue of Consideration
Whether the notice under Section 148 of the Income Tax Act, 1961 for reassessment was valid or amounted to a change of opinion on the same set of facts already examined during original assessment.
Final Decision
The petition is allowed. The notice dated 31 March 2021 under Section 148 of the Income Tax Act, 1961 and the order dated 2 December 2021 rejecting the petitioner's objections are quashed and set aside. Rule is made absolute.
Law Points
- Change of opinion
- Reassessment
- Section 147
- Section 148
- Income Tax Act
- 1961
- Jurisdiction
- Notice validity
