Reopening of assessment under the Income Tax Act requires fresh tangible information; reliance on previously available data constitutes a change of opinion, which is impermissible.

JUDGMENT :

(Per M. S. Karnik, J)

1. Heard learned counsel for the parties.

2. Rule. The rule is made returnable forthwith at the request and with the consent of the learned counsel for the parties.

3. The challenge in this petition under Article 226 of the Constitution of India is to the impugned notice dated 31.03.2022 issued by the Income Tax Officer, Ward-1, Margao under Section 148 of the Income Tax Act, 1961 (the Act for short).

4. The facts in a nutshell are thus:

The petitioner-assessee is a full-fledged money changer pursuant to a full-fledged money changer's license issued by the RBI under the Foreign Exchange Management Act, 1999. The assessee undertakes the sale and purchase of foreign currency and makes a profit only on the basis of the commission it earns.

5. The assessee filed income tax returns for the Assessment Year 2018-2019 disclosing the total taxable income of Rs.3,50,100/­ (Rupees Three Lakhs Fifty Thousand One Hundred Only). Respondent No.2 issued notice under Section 143(2) of the Act to the assessee for complete scrutiny on 22.09.2019. The assessee also received notice under Section 142(1) of the Act on 10.12.2020 calling upon the assessee to submit various documents and to answer various questions concerning the transactions. In the annexure to the notice under Section 142(1), it was mentioned that the complete scrutiny was initiated, major issue being high risk transactions. The assessee inter alia was called upon to explain the nature of source of cash deposits aggregating to an amount of Rs.52,55,50,000/- (Rupees Fifty Two Crores Fifty Five Lakhs Fifty Thousand Only).

6. The assessee submitted all the details and answered all the queries vide communication dated 10.02.2021. The assessee relied upon a cash flow statement, register of sale of foreign currency, daily summary and balance book, register of purchase of foreign currency for public, register of sale of foreign currency to authorized dealers and money changers, summary of sale and purchase of foreign currency, cash register and RBI audit letter. The assessee indicated that the RBI had done a thorough audit relating to inspection of all books and records relating to FMMC transactions for Financial Year 2017-18.

7. Respondent No.2 after complete scrutiny passed an Assessment Order dated 12.05.2021 adding an income of Rs.91,800/- to the income of the assessee on account of transaction ofRs.45,90,000/- which was the amount advanced by the assessee to Umami Forex and Holidays Private Limited.

8. A show cause notice under Section 148A (b) of the Act was issued calling the assessee to show cause as to why in view of details contained in Annexure - A, a notice under Section 148 of the Act should not be issued. The assessee responded to the show cause notice by his reply dated 21.03.2022 inter alia pointing out that on the earlier occasion the scrutiny was conducted under Section 143(2) of the Act and that full information about cash deposit was submitted by the assessee and that the show cause notice was issued by respondent No.2 without verifying its own records. Respondent No.3 passed impugned order under Section 148A(d) of the Act on 31.03.2022 based on the report of the DDIT (INV) Unit -1 Panaji, which stated that the net profit declared by the assessee was 0.05% of the turnover and felt that in the line of business of forex dealers in Goa, the average gross profit would be 0.50% of the turnover. The report referred to NP/GP ratio. Simultaneously, Respondent No.3 issued notice under Section 148 of the Act on 31.03.2022 for assessment/re-assessment of the income of the assessee for the Assessment Year 2018-19.

SUBMISSIONS OF THE PETITIONER

9. Mr Parag Rao, learned counsel for the assessee in challenge to the impugned notice submitted that in the absence of information, the issuance of the impugned order and notice dated 31.03.2022 is illegal and without satisfaction of the jurisdictional requirement. Assuming without admitting that the cash deposits would c