Case Note & Summary
The petitioner, Gujarat Metal Cast Industrial Private Limited, a company incorporated under the Companies Act, 1956 and engaged in manufacturing of Alloy Metals, filed its return of income for Assessment Year 2013-14 on 31.07.2013 claiming deduction under Section 35(2AB) of the Income Tax Act, 1961 in respect of expenditure incurred on scientific research. The case was selected for scrutiny assessment, and during the proceedings, the petitioner furnished details of research and development expenditure along with relevant certificates. The assessment was completed under Section 143(3) of the Act on 14.03.2016 without disturbing the claim. Subsequently, the assessment was reopened by notice under Section 148 dated 06.05.2021, and a notice under Section 143(2) read with Section 147 was issued on 23.10.2021. The petitioner filed objections, but the respondent passed an order under Section 148A(d) on 27.07.2022 and issued a fresh notice under Section 148 on the same date. The petitioner challenged these orders by way of a writ petition under Article 226 of the Constitution of India. The court noted that the original assessment under Section 143(3) had examined the claim of deduction under Section 35(2AB) and allowed it. The reassessment was sought to be reopened on the ground that the Assessing Officer had not examined the claim properly. The court held that the reassessment was based on a mere change of opinion as no new tangible material was brought on record. The court quashed the order under Section 148A(d) and the notice under Section 148, allowing the petition.
Headnote
A) Income Tax - Reassessment - Section 148 of the Income Tax Act, 1961 - Jurisdictional Fact - The court examined whether the reassessment notice was valid when the original assessment under Section 143(3) had already considered the deduction claim under Section 35(2AB) - Held that the reassessment was based on a mere change of opinion as no new tangible material was brought on record, rendering the notice invalid (Paras 6-8)
B) Income Tax - Section 148A(d) Order - Validity - The court considered the order passed under Section 148A(d) of the Income Tax Act, 1961 which was based on the same material already examined during scrutiny - Held that the order lacked jurisdictional fact and was unsustainable (Paras 6-8)
C) Income Tax - Change of Opinion - Reassessment - The court held that reopening of assessment on the ground that the Assessing Officer did not examine the claim properly during original assessment amounts to change of opinion, which is not permissible under law (Para 8)
Issue of Consideration
Whether the reassessment notice under Section 148 of the Income Tax Act, 1961 for Assessment Year 2013-14 was valid when the Assessing Officer had already examined the claim of deduction under Section 35(2AB) during original scrutiny assessment under Section 143(3) and no new tangible material existed to justify reopening
Final Decision
The court allowed the petition, quashing the order dated 27.07.2022 passed under Section 148A(d) and the notice under Section 148 of the Income Tax Act, 1961 for Assessment Year 2013-14. Rule was made absolute.
Law Points
- Reassessment notice under Section 148 of the Income Tax Act
- 1961 cannot be issued based on same material considered in original assessment under Section 143(3) without fresh tangible material
- Change of opinion not permissible
- Section 148A(d) order must be based on correct jurisdictional facts
Case Details
R/Special Civil Application No. 1087 of 2025
Honourable Mr. Justice A.S. Supehia, Honourable Mr. Justice Pranav Trivedi
Ms. Vaibhavi K Parikh for the Petitioner, Mr. Rutvij R Patel for the Respondent
Gujarat Metal Cast Industrial Private Limited
The Assistant Commissioner of Income Tax Circle 1(1)(1) Vadodara
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Nature of Litigation
Writ petition under Article 226 of the Constitution of India challenging reassessment proceedings under the Income Tax Act, 1961
Remedy Sought
Petitioner sought quashing of order dated 27.07.2022 passed under Section 148A(d) and notice under Section 148 of the Income Tax Act, 1961 for Assessment Year 2013-14
Filing Reason
Petitioner challenged the validity of reassessment notice on the ground that it was based on change of opinion as the original scrutiny assessment under Section 143(3) had already examined the deduction claim under Section 35(2AB)
Previous Decisions
Original assessment under Section 143(3) was completed on 14.03.2016 allowing the deduction claim; reassessment was initiated by notice under Section 148 dated 06.05.2021 and subsequent notice under Section 143(2) read with Section 147 dated 23.10.2021; order under Section 148A(d) and notice under Section 148 were passed on 27.07.2022
Issues
Whether the reassessment notice under Section 148 of the Income Tax Act, 1961 for Assessment Year 2013-14 was valid when the original assessment under Section 143(3) had already examined the claim of deduction under Section 35(2AB) and no new tangible material existed
Whether the order under Section 148A(d) of the Income Tax Act, 1961 was based on correct jurisdictional facts
Submissions/Arguments
Petitioner argued that the reassessment was based on a mere change of opinion as the original scrutiny assessment had examined the claim and allowed it, and no new tangible material was brought on record
Respondent contended that the Assessing Officer had not examined the claim properly during original assessment, justifying reopening
Ratio Decidendi
Reassessment under Section 148 of the Income Tax Act, 1961 cannot be initiated based on a mere change of opinion when the original assessment under Section 143(3) had already examined the same claim. The order under Section 148A(d) must be based on jurisdictional facts, and in the absence of new tangible material, the reassessment is invalid.
Judgment Excerpts
Having regard to the controversy arising in this petition which is in narrow compass with the consent of the learned advocates for the respective parties the same is taken up for hearing.
The facts giving rise to the filing of the present writ petition are that the petitioner is a Company incorporated under the provisions of Companies Act, 1956 and is inter alia acting as manufacturer of Alloy Metals.
It is the case of the petitioner that for the year under consideration, the case of the petitioner was selected for scrutiny assessment.
It is the case of the petitioner that the assessment was originally reopened by the issuance of the notice under Section 148 of the Act dated 06.05.2021.
Procedural History
Original assessment under Section 143(3) completed on 14.03.2016. Reassessment initiated by notice under Section 148 dated 06.05.2021. Notice under Section 143(2) read with Section 147 issued on 23.10.2021. Order under Section 148A(d) and notice under Section 148 passed on 27.07.2022. Petitioner filed writ petition under Article 226 on 03.02.2026, which was allowed.
Acts & Sections
- Income Tax Act, 1961: 35(2AB), 143(3), 147, 148, 148A(d)
- Constitution of India: Article 226
- Companies Act, 1956:
