Reopening of assessment under the Income Tax Act requires tangible material; mere change of opinion is insufficient for reassessment.

ORDER :

(B.Krishna Mohan, J.)

Heard the learned counsel for the petitioner and the learned Standing Counsel for the respondent Nos.1 to 3.

2. This writ petition is filed questioning the Notice with DIN & Notice No.ITBA/AST/S/148/2020-21/1031908437(1) dated 30.03.2021 issued by the 1st respondent (Impugned Notice-1), Notice with DIN-ITBA/AST/F/142(1)/2021-22/1037352472(1) dated 29.11.2021 issued by the 3rd respondent (Impugned Notice-2) and the Order with Din & Letter No.ITBA/AST/F/17/2021-22/1038028742(1) dated 22.12.2021 issued by the 3rd respondent (Impugned Order) as being in violation of the principles of natural justice, without jurisdiction, patently illegal, arbitrary, violative of Article 14 and Article 19(1)(g)of the Constitution of India.

3. The learned counsel for the petitioner submits that the petitioner is interalia, engaged in the manufacture and supply of soluble instant coffee powder, agglomerated/granule coffee, roast & ground coffee and concentrated liquid coffee and other related products. The petitioner filed its Return of Income for the Assessment Year 2015-2016 and all the audited financials including Form 3CA under Section 44AB of the Income Tax Act, 1961, balance sheets and statement of profit and loss on 28.09.2015 declaring a total income of Rs.112,58,64,910/-.

Then the petitioner received a notice under section 142(1) of the Income st Tax Act, 1961 dated 11.12.2018 from the 1 respondent requesting the petitioner to furnish accounts for the conduct of income tax assessment. The petitioner had complied with the notice received and furnished the required information and accounts including the tax audit report under Form 3CA, Balance sheets and statement of profit and loss. In particular, the petitioner also furnished information regarding interest expenses and the purchased st st shares of Ngon Coffee Company as requested by the 1 respondent. The 1 respondent completed the assessment under section 143(3) of the Act and passed an assessment order dated 28.12.2018.

The petitioner again was issued a notice under Section 148 of the Act by st the 1 respondent dated 30.03.2021 (Impugned Notice-1) stating that the assessing officer has reasons to believe that the petitioner’s income chargeable to tax for the AY 2015-2016 has escaped assessment within the meaning of section 147 of the Act and hence, proposing to reassess the income and requiring the petitioner to furnish a return for the same. In response to the Impugned Notice-1, the petitioner submitted its Return of st st Income to the 1 respondent again on 16.04.2021. The 1 respondent issued a notice dated 15.06.2021 to the petitioner under section 143(2) read with section 147 of the Act stating issues as per recorded for reopening and that income chargeable to tax of Rs.2,15,35,000/- has escaped assessment under Section 147 of the Act for the AY 2015-2016.

The petitioner was also issued with a notice dated 17.11.2021 stating that as per the information available on record, it is noticed from the balance sheets as on 31.03.2014 and 31.03.2015 that the total investments made by assessee in shares were to the tune of Rs.132.62 Crs. and Rs.150.96 Crs. respectively as furnished by the petitioner and thereby the investments in shares during the previous year corresponding to the AY 2015-2016 have increased by an amount of Rs.18.34 Crs. from the previous year corresponding to the AY 2015-2016. This notice also states that the assessee has debited the P&L Account for the year ended 31.03.2015 an amount of Rs.5.64 Crs. towards finance costs and in view of these facts, given that expenses were incurred by the petitioner relatable to earning of exempt income and section 14-A read with rule 8D are applicable whereby such expenses incurred be disallowed.

The notice further states that a total disallowance of Rs.2,15,35,000/-was never made by the petitioner while filing its income tax return and hence such income of Rs.2,15,35,000/- has escaped assessment within the meaning of