The main legal point established in the judgment is that the reopening of assessment should be based on the availability of tangible material and not on a mere change of opinion of the Assessing Officer.

JUDGMENT :

Neela Gokhale, J.

1. Rule. Heard the parties finally by consent. Rule is made returnable forthwith.

2. Petitioner assails order dated 21st January 2022 rejecting the objections raised by Petitioner to the notice of Respondents conveying reasons to believe that income has escaped assessment. Petitioner also assails notice dated 31st March 2021 issued by Respondents under Section 148 of the Income Tax Act, 1961 (“Act”) seeking to reopen the assessment for Assessment Year (“AY”) 2016-17 and other consequential relief.

3. Petitioner is a company registered under the Companies Act, 1956, engaged in the business of power generation. Respondent No.1 is the Assistant Commissioner of Income Tax having jurisdiction over Petitioner. Respondent No.2 is the National Faceless Assessment Centre set up by the Central Board of Direct Taxes ("CBDT") and Respondent No.3 is the Union of India.

4. Petitioner filed its return of income for AY 2016-17 on 27th September 2016 declaring a total income of Rs.1,24,47,75,691/- and Rs.1,68,00,96,627/- under the provisions of Section 115JB of the Act. Respondent No.1- Assessing Officer (“AO”) issued a notice dated 17th July 2016 under Section 143(2) of the Act, selecting the case of Petitioner for scrutiny assessment. Petitioner by its letter dated 4th August 2017 provided all the required details and documents to the AO including audited accounts, tax audit report, return of income and computation of income. The AO by another notice dated 10th May 2018 raised specific queries and sought further details/documents from Petitioner. Petitioner by its letter dated 20th June 2018 responded with details and documents as sought by the AO followed by letters dated 2nd July 2018 and 16th July 2018 specifically providing party wise details of expenses and details of other investments as required by the AO. Relying upon the information provided by Petitioner, an assessment order dated 20th July 2018 was passed under Section 143(3) of the Act determining the total income of Petitioner to be Rs.123,38,96,585/-. Petitioner sought rectification of an error apparent on record in the assessment order and the AO passed the said order under Section 154 r/w Section 143(3) of the Act and granted credit of tax deducted at source.

5. The AO issued a notice dated 31st March 2021 under Section 148 of the Act stating that the AO had reasons to believe that Petitioner’s income for AY 2016-17 has escaped assessment. While filing the return of income on 24th April 2021, Petitioner also requested the AO to furnish a copy of the reasons recorded for reopening the assessment. The reasons were provided by notice dated 22nd November 2021 to which Petitioner took objections, but the objections came to be rejected by order dated 21st January 2022. It is this order, which is assailed by Petitioner along with notice of 31st March 2021 seeking to reopen the assessment for AY under consideration. Further notices dated 3rd February 2022 and 8th February 2022 were issued under Section 142(1) of the Act calling upon Petitioner to submit its response. Petitioner has thus, filed the present Writ Petition.

6. Mr. Jeet Kamdar, learned counsel appearing for Petitioner, objects to the reopening of assessment essentially on the ground that Petitioner had provided information regarding all the queries raised by the AO and it is only after satisfying himself regarding all the information that the original assessment order was passed. He contends that there are no reasons to believe that income has escaped the assessment and the reopening is based on a mere change of opinion of the AO, which is impermissible in law.

7. Mr. Kamdar raises the following objections:

(1) The impugned notice and the order are invalid, improper and without jurisdiction on the ground that the reasons to believe escapement based on a mere suspicion do not constitute a reason to believe. The queries raised by the AO and answered by Petitioner by letters dated 20th June 2019, 2nd July