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.

JUDGMENT :

(G.S. Kulkarni, J.)

1. Rule returnable forthwith. Respondents waive service. By consent of the parties, heard finally.

2. This petition under Article 226 of the Constitution of India challenges the legality and validity of the notice dated 31 March 2021 issued to the petitioner under Section 148 of the Income Tax Act, 1961 (for short ‘the IT Act’) and an order dated 24 February 2022 disposing of the objections filed for reopening of the assessment and the consequential notice dated 14 November 2021 issued under Section 143(2) of the IT Act. It also assails the notice dated 24 February 2022 issued under Section 142(1) of the IT Act. There is a further prayer that the respondents be directed by a writ of this Court, not to act upon the impugned orders and the impugned notices.

3. The petitioner has also raised an issue in regard to the approval granted under Section 151 of the IT Act for reopening of the assessment. In this regard, a prayer is made for a direction to the respondents to furnish a copy of the approval obtained under Section 151 of the IT Act for reopening of the assessment. Considering such prayer, on 14 March 2022 after hearing the parties, a coordinate Bench of this Court granted an interim relief to the petitioner in terms of the said prayer whereby the respondents were directed to furnish to the petitioner a copy of the approval under Section 151 of the IT Act. The Court also granted an ad-interim relief, of a protection in terms of prayer clause (d) restraining the respondents from acting upon the impugned order and the impugned notices. These ad-interim orders granted by the Court continue to operate till date.

4. In pursuance of the order passed by this Court, a reply affidavit on behalf of the respondents of Shri Sandip Mandal, Deputy Commissioner of Income Tax-6(1) (2), Mumbai, is placed on record, opposing the reliefs as prayed in the petition.

5. The facts relevant for adjudication of the proceedings are : The assessment year in question is Assessment Year 2013-14. The petitioner was formerly known as “Essar Infrastructure Services Pvt. Limited”. The petitioner filed its return of income on 24 September 2013. On 20 July 2015 a notice under Section 142(1) of the IT Act was issued to the petitioner in relation to the assessment in question, calling upon the petitioner to furnish in writing and verified in the prescribed manner, information on the thirteen requirements which were set out in the Annexure. The relevant requirements being: a brief note on the nature of business of the petitioner, copies of return of income (original and revised, if any), also significant information as sought was in regard to the balance sheet, Profit & Loss Account, Tax Audit Report alongwith relevant schedules, as also statement of computation of total income showing the working of income admitted under each head as also auditor’s report in Form No.29B, in regard to Book Profit under Section 115JB alongwith computation of Book Profit and liability thereon.

6. The petitioner replied to the said notice by its letter dated 3 August 2015 furnishing the necessary information under such notice issued by him under Section 142(1) of the IT Act. The petitioner furnished copies of balance sheet, profit and loss account and tax audit report under Section 44AB for the financial year 2012-13 as also computation of total income. The petitioner also informed the Assessing Officer that the petitioner is not having any book profit and it has a business loss, hence, the tax payable as per normal provisions was higher than MAT as per Section 115JB, during the assessment year under consideration.

7. Thereafter, another notice dated 1 January, 2016 under Section 142(1) of the IT Act was issued to the petitioner whereby the petitioner was called upon to furnish information on the points/ matters specified in the annexure which were about 24 requirements, the relevant being item Nos.6, 7, 8, 9 and 10 which read thus:

“ M/s.Essar Infrastructure