Case Note & Summary
The petitioner, M/s. Anand Developers, a partnership firm, challenged a notice dated 29 March 2019 issued under Section 148 of the Income Tax Act, 1961, seeking to reopen its assessment for the assessment year 2014-15, and the subsequent order dated 17 December 2019 disposing of its objections. The original assessment had been completed under Section 143(3) on 16 March 2015 after the petitioner made full and true disclosures vide letter dated 20 February 2015. The petitioner argued that the reopening was based on a mere change of opinion and that there was no failure to disclose material facts, making the notice beyond the four-year limit invalid. The respondents contended that the petitioner had admitted to violating Section 80IB and failed to make full disclosures. The court, after hearing both sides, found that the petitioner had indeed made complete disclosures during the original assessment and that the Assessing Officer had considered them. The reopening notice was issued without any fresh material and was based on a change of opinion. The court held that the notice and order were without jurisdiction and quashed them, allowing the writ petition.
Headnote
A) Income Tax - Reopening of Assessment - Section 147, 148 Income Tax Act, 1961 - Reopening beyond four years - The Assessing Officer issued notice under Section 148 to reopen assessment after more than four years from the original assessment under Section 143(3). The assessee had made full disclosures during original assessment. The court held that without failure to disclose true and full facts, reopening beyond four years is without jurisdiction. (Paras 3-6)
B) Income Tax - Change of Opinion - Section 147, 148 Income Tax Act, 1961 - Mere change of opinion cannot justify reopening - The court held that reopening based on same material considered during original assessment amounts to change of opinion and is not permissible. (Paras 4-6)
Issue of Consideration
Whether the Assessing Officer had jurisdiction to issue notice under Section 148 of the Income Tax Act, 1961 to reopen assessment after expiry of four years from the date of assessment, when the assessee had made true and full disclosures during the original assessment proceedings.
Final Decision
The court allowed the writ petition, quashing the notice dated 29 March 2019 under Section 148 and the order dated 17 December 2019 disposing of objections.
Law Points
- Reopening of assessment beyond four years requires failure to disclose true and full facts
- Change of opinion cannot be basis for reopening
- Section 148 notice without fresh material is invalid
Case Details
2020 LawText (BOM) (02) 109
WRIT PETITION NO. 17 OF 2020
M.S. Sonak, Kum. Nutan D. Sardessai
Mr. Shivan Desai, Ms. Susan Linhares
Asst. Commissioner of Income Tax Circle 2(1) and Commissioner of Income-Tax
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Nature of Litigation
Writ petition challenging notice under Section 148 of Income Tax Act, 1961 for reopening of assessment and order disposing of objections.
Remedy Sought
Petitioner sought quashing of notice dated 29 March 2019 and order dated 17 December 2019.
Filing Reason
Petitioner challenged the reopening of assessment on grounds of lack of jurisdiction due to change of opinion and absence of failure to disclose true and full facts.
Previous Decisions
Original assessment under Section 143(3) was completed on 16 March 2015 after considering disclosures made by petitioner.
Issues
Whether the Assessing Officer had jurisdiction to issue notice under Section 148 after expiry of four years from the date of assessment when there was no failure to make true and full disclosures.
Whether the reopening was based on a mere change of opinion and thus invalid.
Submissions/Arguments
Petitioner submitted that true and complete disclosures were made during original assessment and reopening was based on change of opinion, hence without jurisdiction.
Respondents submitted that petitioner admitted violation of Section 80IB and failed to make full disclosures, justifying reopening.
Ratio Decidendi
Reopening of assessment beyond four years under Section 147/148 of the Income Tax Act, 1961 is without jurisdiction if the assessee had made true and full disclosures during the original assessment and the reopening is based on a mere change of opinion without fresh material.
Judgment Excerpts
Challenge in this Petition is to the Notice dated 29th March, 2019, issued under Section 148 of the Income Tax Act, 1961 (IT Act) and the order dated 17th December, 2019, disposing of the Petitioner's objections to the reopening of the assessment in pursuance of the notice dated 29th March, 2019.
Mr. Shivan Desai, learned Counsel for the Petitioner submits that in the present case, true and complete disclosures were made by the Petitioner vide letter dated 20th February, 2015 in the course of the assessment proceedings itself.
Procedural History
Original assessment under Section 143(3) completed on 16 March 2015. Notice under Section 148 issued on 29 March 2019. Petitioner filed objections which were disposed of by order dated 17 December 2019. Petitioner then filed writ petition on 18 February 2020.
Acts & Sections
- Income Tax Act, 1961: Section 143(3), Section 147, Section 148, Section 80IB
