Case Note & Summary
The petitioner, M/s. Alliance Space Pvt. Ltd., a company engaged in property development, challenged two notices dated 24th March 2015 and 29th March 2014 issued under Section 148 of the Income Tax Act, 1961 for reopening of assessments for assessment years 2008-09 and 2009-10 respectively. The petitioner had originally filed its return of income for AY 2008-09 on 30th September 2008, declaring a loss. The assessment was completed under Section 143(3) on 30th December 2010 after scrutiny, wherein the Assessing Officer examined the share subscription agreement dated 16th November 2007 and the share premium of Rs.990 per share. Subsequently, the Assessing Officer issued notice under Section 148 on 29th March 2014 seeking to reopen the assessment on the ground that the share premium was excessive and required examination under Section 56(2)(viib) of the Act. The petitioner sought reasons for reopening, which were provided. The court examined the reasons and found that the Assessing Officer had already examined the share subscription agreement and share premium during the original assessment. The court held that reopening based on the same material without any fresh tangible evidence amounted to a mere change of opinion, which is not permissible under law. The court also noted that the approval under Section 151 was granted without proper application of mind. Consequently, the court quashed both notices and allowed the writ petitions.
Headnote
A) Income Tax - Reopening of Assessment - Section 148, Income Tax Act, 1961 - Validity of Notice - The Assessing Officer issued notice under Section 148 to reopen assessment for AY 2008-09 and 2009-10 on the ground that share premium received by the petitioner was excessive and required examination under Section 56(2)(viib). The court held that since the Assessing Officer had already examined the share subscription agreement and share premium during original assessment, the reopening was based on a mere change of opinion and lacked fresh tangible material. The notices were quashed. (Paras 1-10) B) Income Tax - Approval for Reopening - Section 151, Income Tax Act, 1961 - Requirement of Proper Application of Mind - The Additional Commissioner granted approval under Section 151 without proper application of mind, as the reasons recorded did not disclose any new material. The court held that approval must be based on independent satisfaction and not merely on the Assessing Officer's request. (Paras 8-10) C) Income Tax - Reasons for Reopening - Disclosure of Reasons - The petitioner sought reasons for reopening, which were provided. The court examined the reasons and found that they did not indicate any failure to disclose material facts or any new tangible material. The reopening was therefore invalid. (Paras 5-10)
Issue of Consideration
Whether the notices issued under Section 148 of the Income Tax Act, 1961 for reopening of assessment for assessment years 2008-09 and 2009-10 were valid, particularly when the Assessing Officer had already examined the issue during original assessment and the reopening was based on a change of opinion.
Final Decision
Both writ petitions are allowed. The impugned notices dated 24th March 2015 and 29th March 2014 are quashed. Rule is made absolute accordingly. No order as to costs.
Law Points
- Reopening of assessment under Section 148 requires fresh tangible material
- mere change of opinion is not sufficient
- approval under Section 151 must be proper
- reasons recorded must be disclosed if sought
