Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2024 Supreme(Bom) 388

K. R. SHRIRAM, NEELA GOKHALE
Mira Bhavin Mehta – Appellant
Versus
Income Tax Officer Ward 6 (3) (1) – Respondent

Advocates:
Advocate Appeared:
For the Appellant : Mr. K. Gopal a/w Ms Neha Paranjpe and Mr. Akhilesh Deshmukh
For the Respondent: Mr. Suresh Kumar

Judgement Key Points

Key Points: - The concept of change of opinion is an in-built test to check abuse of power by the Assessing Officer; reassessment on basis of mere change of opinion is invalid. (!) (!) - Reopening based on a change of opinion cannot justify income escaping assessment; if issues were considered during original assessment, reopening is improper. (!) (!) - Siemens Financial Services reference confirms that change of opinion can justify reopening only if there is tangible material; otherwise it amounts to review, which is not permitted. (!) (!) - The Division Bench held that the reopening on 31.03.2022 under sections 148A(d) and 148 was illegal due to change of opinion. (!) (!) - The petition was allowed; impugned order and notice were quashed and set aside. (!) - There is a settled jurisprudence that the AO cannot review his own assessment; reassessment must be based on facts forming a belief of escapement. (!) (!) - The order under section 148A(d) and notice under section 148 were quashed as they were based on change of opinion. (!)

What is the validity of reopening an assessment under Section 147 where the AO's action is based on a change of opinion?

What is the effect of a change of opinion on reassessment where the issue was already considered during original assessment proceedings?

What are the implications of the principle that the Assessing Officer must have tangible material and not merely a change of opinion to reopen an assessment?

JUDGMENT :

K. R. SHRIRAM, J.

1. Rule. Rule made returnable forthwith and heard. As the pleadings are completed, this court, by consent of the parties has taken up the matter for final hearing.

2. Petitioner, an individual, filed return of income on 28th August 2018 for AY-2018-19 declaring total income of Rs.26,26,220/-. Petitioner, thereafter, received a notice dated 28th September 2019 issued under Section 143(2) of the Income Tax Act 1961 (the Act) stating that return of income has been selected for limited scrutiny with regard to investments in immovable property, capital gains/income on sale of property. Petitioner was called upon to submit evidence with regard to the two issues raised.

Thereafter, petitioner received a notice dated 12th December 2019 issued under Section 142(1) of the Act calling upon petitioner to provide documents and details with regard to capital asset that was sold during the assessment year. Petitioner vide its Chartered Accountant's letter dated 11th December 2020, provided details of the property sold, consideration received, etc., the property being Flat No.802, 8th floor of Boulevard-III, Ghatkopar (West), Mumbai 400086 (the said flat). Later, petitione

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2024 Supreme(Bom) 388

K. R. SHRIRAM, NEELA GOKHALEMira Bhavin Mehta – AppellantVersusIncome Tax Officer Ward 6 (3) (1) – Respondent

What is the validity of reopening an assessment under Section 147 where the AO's action is based on a change of opinion?

What is the effect of a change of opinion on reassessment where the issue was already considered during original assessment proceedings?

What are the implications of the principle that the Assessing Officer must have tangible material and not merely a change of opinion to reopen an assessment?

K. R. SHRIRAM, NEELA GOKHALE
Mira Bhavin Mehta – Appellant
Versus
Income Tax Officer Ward 6 (3) (1) – Respondent