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G. S. KULKARNI, SOMASEKHAR SUNDARESAN
Saraswat Co-operative Bank Ltd. – Appellant
Versus
Assistant Commissioner of Income-tax Circle- 1(3)(1) – Respondent
JUDGMENT :
(Somasekhar Sundaresan J.) :
1. Rule. With the consent of the parties, rule is made returnable forthwith and the Writ Petition is taken up for final disposal.
2. This Writ Petition challenges the reassessment proposed to be undertaken by the Revenue, of the income tax return filed by the Petitioner-Bank for the Assessment Year 2015-16. The notice dated 30th March, 2021 initiating reassessment (“Impugned Notice”) issued under Section 147 read with Section 148 of the Income Tax Act, 1961 (“the Act”) has been approved under Section 151 of the Act on the premise that income had escaped assessment owing to absence of full and true disclosures by the Petitioner at the time of the original assessment.
Factual Background and Context:
3. The original assessment was made pursuant to an order dated 22nd December, 2017 (“Assessment Order”) after scrutiny of the returns filed by the Petitioner. The Petitioner had originally declared a total income of Rs. 95.14 Crores. Pursuant to a notice for scrutiny under Section 143(2) dated 29th July, 2016. Another notice dated 27th November, 2017 was issued under Section 142(1), along with a questionnaire. Eventually, an Assessment Order was passed c
Reassessment under Section 147 after four years requires proof of failure to disclose material facts, which was not demonstrated in this case.
Reassessment under Section 147 requires proof of failure to disclose material facts during the original assessment, which was not demonstrated in this case.
Reopening of assessment under the Income Tax Act after four years is impermissible without failure to disclose material facts; mere change of opinion does not justify such action.
Reassessment u/s 147 after 4 years invalid without new tangible material or proven failure to disclose material facts; mere reappraisal of records is change of opinion.
The main legal point established in the judgment is that reassessment proceedings must be based on tangible material and cannot be initiated solely on the basis of a 'change of opinion' without fresh....
The 'reason to believe' for reassessment must be based on tangible material with a direct nexus to the formation of the belief, and reassessment cannot be made on a change of opinion.
The judgment established the importance of tangible material and the prohibition of a mere change of opinion in the exercise of power under section 147 of the Income Tax Act.
A defective return cannot be regarded as an invalid return.
Reassessment under Section 147 requires fresh tangible material; failure to disclose facts must be established; jurisdictional conditions were not met.
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