Case Note & Summary
The petitioner, Plus Paper Food Pac Ltd., filed a writ petition challenging a notice dated 18.11.2013 issued under Section 148 of the Income Tax Act, 1961, and an order dated 4.2.2014 rejecting its objections. The petitioner had undergone original assessment proceedings for the relevant year, during which it had disclosed all material facts, including long-term capital gains, trial run expenses, and bad debts. The Assessing Officer had scrutinized the accounts, sought details, and passed an assessment order on 7.12.2001 after applying his mind. The petitioner argued that there was no reason to believe that any income had escaped assessment, and the reopening was based on a mere change of opinion. The respondents contended that the notice was valid. The court, after hearing both sides, held that since the petitioner had made full and true disclosure and the Assessing Officer had applied his mind during the original assessment, the reassessment notice was not sustainable. The court quashed the notice and the order rejecting objections, allowing the petition.
Headnote
A) Income Tax - Reassessment - Section 148 of Income Tax Act, 1961 - Reopening of Assessment - The court considered whether a notice under Section 148 could be sustained when the petitioner had disclosed all material facts during original assessment and the Assessing Officer had passed an assessment order after scrutiny. Held that the reassessment was based on a mere change of opinion and was invalid as there was no fresh material to justify the belief that income had escaped assessment (Paras 1-5).
Issue of Consideration
Whether the notice under Section 148 of the Income Tax Act, 1961 and the subsequent order rejecting objections were valid when the petitioner had disclosed all material facts during the original assessment and the Assessing Officer had applied his mind.
Final Decision
The court allowed the petition, quashing the notice dated 18.11.2013 under Section 148 of the Income Tax Act, 1961 and the order dated 4.2.2014 rejecting objections.
Law Points
- Reassessment notice under Section 148 of Income Tax Act
- 1961 cannot be issued on mere change of opinion
- Full and true disclosure of material facts during original assessment bars reopening
- Assessing Officer must have reason to believe that income escaped assessment based on fresh material
Case Details
WRIT PETITION (L) NO.746 OF 2015
S.C. Dharmadhikari, A.K. Menon
Mr. K. Gopal a/w Mr. Jitendra Singh for the Petitioner, Mr. Suresh Kumar for the Respondents
Income Tax Officer & Anr.
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Nature of Litigation
Writ petition challenging notice under Section 148 of Income Tax Act, 1961 for reassessment and order rejecting objections.
Remedy Sought
Petitioner sought writ of mandamus directing Respondent No.1 to withdraw and cancel the notice dated 18.11.2013 under Section 148 and the order dated 4.2.2014 rejecting objections, and restraining respondents from taking steps pursuant to the notice.
Filing Reason
Petitioner alleged that the reassessment notice was based on mere change of opinion as all material facts were disclosed during original assessment and Assessing Officer had applied his mind.
Previous Decisions
Original assessment order passed on 7.12.2001 after scrutiny.
Issues
Whether the notice under Section 148 of the Income Tax Act, 1961 was valid when the petitioner had disclosed all material facts during original assessment.
Whether the reassessment was based on a mere change of opinion.
Submissions/Arguments
Petitioner submitted that all material facts were fully and truly disclosed during original assessment, including long-term capital gains, trial run expenses, and bad debts, and the Assessing Officer had applied his mind and passed assessment order on 7.12.2001.
Petitioner argued that there was no reason to believe that any income had escaped assessment, and the reopening was based on mere change of opinion.
Ratio Decidendi
Reassessment under Section 148 of the Income Tax Act, 1961 cannot be initiated on a mere change of opinion when the assessee has made full and true disclosure of all material facts during the original assessment and the Assessing Officer has applied his mind and passed an assessment order.
Judgment Excerpts
Heard learned counsel for the parties.
This petition is filed seeking writ of mandamus directing Respondent No.1 to withdraw and cancel the notice dated 18.11.2013 issued under section 148 of the Income Tax Act, 1961 and the order dated 4.2.2014 rejecting the objections of the Petitioner.
According to the Petitioner, there was no occasion for the Respondent No.1 to believe that any income had escaped assessment.
Procedural History
The petitioner filed a writ petition on an unspecified date challenging a notice under Section 148 of the Income Tax Act, 1961 dated 18.11.2013 and an order rejecting objections dated 4.2.2014. The petition was heard on 25.3.2015 and allowed.
Acts & Sections
- Income Tax Act, 1961: 148
