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IN THE HIGH COURT OF CALCUTTA
Md. Nizamuddin, J.
Peerless General Finance And Investment Co. Ltd. - Appellant
Versus
Assistant Commissioner Of Income Tax, Circle 3(1), Kolkata And Others - Respondent
WPO No. 477 of 2019
Decided On : 29-08-2022
INCOME TAX - REASSESSMENT - SECTION 148 - NOTICE - QUASHING OF - JURISDICTION - CHANGE OF OPINION - DISCLOSURE OF MATERIAL FACTS - SECTION 147 - SECTION 143(3) - Held, that the impugned reassessment proceeding is on a mere change of opinion and the initiation of impugned reassessment proceeding under Section 147 and issuance of notice under Section 148 of the Income Tax Act, 1961 are based on the self-same material which were already available before the Assessing Officer in course of regular assessment and upon which the predecessor of the present Assessing Officer had already formed an opinion and there is no new material which came to the notice and knowledge of the present Assessing Officer which could be called to have been not disclosed truly and fully in course of scrutiny assessment due to any omission or failure on the part of the assessee petitioner to disclose the same truly and fully in course of scrutiny assessment proceeding.
Fact of the Case:
Petitioner challenged the impugned notice under Section 148 of the Income Tax Act, 1962 dated 31st March, 2019 and the impugned order passed by the respondent Assessing Officer dated 3rd September, 2019 rejecting the petitioner's objection dated 26th August, 2019 against the impugned notice under Section 148 of the Act relevant to the Assessment Year 2012-13 issued after expiry of four years from the end of relevant assessment year for reopening of scrutiny assessment under Section 143 (3) of the Act.
Finding of the Court:
The impugned reassessment proceeding has been initiated and notice under Section 148 of the Act has been issued after the expiry of 4 years from the end of relevant Assessment Year to reopen scrutiny assessment under Section 143 (3) of the Income Tax Act, 1961. The assessment sought to be reopened by the Assessing Officer is against the scrutiny assessment on the issue which was already considered and accepted by the then Assessing Officer after being satisfied with the replies by the assessee petitioner on the quarries raised by the Assessing Officer from time to time in the course of scrutiny assessment. Materials on which Assessing Officer sought to reopen the assessment are not new and are the same which were already available before the then Assessing Officer at the time of scrutiny assessment and the predecessor of the present Assessing Officer had already formed an opinion on the said material and allowed relief to the assessee petitioner on the said issue in course of scrutiny assessment. Respondent revenue could not establish in course of hearing that there was any omission or failure on the part of the assessee petitioner in disclosing truly and fully any material fact necessary for the assessment before the Assessing Officer in course of scrutiny assessment.
Issues: None
Ratio Decidendi: The initiation of impugned reassessment proceeding under Section 147 and issuance of notice under Section 148 of the Income Tax Act, 1961 are based on the self-same material which were already available before the Assessing Officer in course of regular assessment and upon which the predecessor of the present Assessing Officer had already formed an opinion and there is no new material which came to the notice and knowledge of the present Assessing Officer which could be called to have been not disclosed truly and fully in course of scrutiny assessment due to any omission or failure on the part of the assessee petitioner to disclose the same truly and fully in course of scrutiny assessment proceeding. The impugned reassessment proceeding is on a mere change of opinion.
Final Decision: Writ Petition allowed.
JUDGMENT
Md. Nizamuddin, J. - Heard learned counsel appearing for the parties.
2. By this Writ Petition, petitioner has challenged the impugned notice under Section 148 of the Income Tax Act, 1962 dated 31st March, 2019 and the impugned order passed by the respondent Assessing Officer dated 3rd September, 2019 rejecting the petitioner's objection dated 26th August, 2019 against the impugned notice under Section 148 of the Act relevant to the Assessment Year 2012-13 issued after expiry of four years from the end of relevant assessment year for reopening of scrutiny assessment under Section 143 (3) of the Act.
3. Facts in brief as appears on perusal of relevant records are as hereunder.
4. Petitioner company on 26.09.2012 filed its return of income for the Assessment Year 2012-13 disclosing a total income of Rs. 167,44,57,970/-
5. The Assessing Officer sent a Notice to the petitioner on 22.08.2013, under Section 143 (2) of the Act for the relevant Assessment Year selecting the said return filed for scrutiny assessment and calling upon the petitioner company to produce or cause to be produced on 16th September, 2013 any document, accounts and any other evidence on which the petitioner company might rely in support of the return filed by it.
6. The Assessing Officer sent a notice dated 22.08.2013 to the petitioner under Section 142 (1) of the Act relating to the relevant Assessment Year calling upon the petitioner company to produce or cause to be produced particulars of accounts and/or documents as mentioned in the said notice and in response to the said notice, petitioner company on 12.09.2013 submitted all detailed documents and information called for in the said notice dated 22nd August, 2013 under Section 142 (1) of the Act which inter alia included Hard copy of the e-filled return form, computation, audited accounts & Tax Audit Report and Form No. 3CD.
7. The Assessing Officer issued another notice on 05.08.2014 Notice under Section 142 (1) of the Act asking the petitioner to produce the documents as mentioned therein and the petitioner complied with the notice dated 5th August, 2014 by furnishing details to the Assessing Officer on 19.08.2014 and 23.12.2014.
8. Petitioner company on 21.01.2015 submitted various particulars/ documents with the Assessing Officer. In Annexure-4 of the said reply, a detailed note was filed as regards treatment of gain from sale of right to property in question as income under the head 'Capital Gains'. Further, all facts relating to entering into Memorandum of Understanding were duly furnished and on 04.02.2015 petitioner company filed with the respondent no. 1 various other documents and information. In Annexure-II, the ledger account for investment in right to properties was duly furnished to the Assessing Officer.
9. Petitioner from time to time and particularly on 09.02.2015, 25.02.2015, 27.02.2015 and 16.03.2015 submitted/furnished/provided all further information and/or documents for the purpose of scrutiny assessment relating to the relevant Assessment Year 2012-13.
10. On 18.03.2015 the then Assessing Officer passed the Assessment Order under Section 143 (3) of the Act for the Assessment Year 2012-13 with several disallowances/additions but accepted the contention of the petitioner as regards taxation of 'right to properties' under the head 'capital gains' and did not make any adjustment in relation thereto and according to the petitioner on 07.08.2018 the CIT (Appeals) -19, Kolkata passed order allowing substantial relief to the petitioner company against which the Revenue filed appeal before the Income Tax Appellate Tribunal and the petitioner company filed cross objection.
11. Respondent no. 1/Assessing Officer on 31.03.2019 issued a notice under Section 148 of the Act for escaped assessment in the Assessment Year 2012-13 within the meaning of Section 147 of the said Act proposing to assess/reassess the income /loss for the said Assessment Year requiring the petitioner company to file its return
Mere change of opinion is not a ground for reopening of assessment under Section 147 of the Income Tax Act, 1961.
Reopening of assessment under Section 148 is invalid if based on materials already available during the original assessment, constituting a mere change of opinion without fresh evidence.
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.
Under section 147 of the Act the proceedings for the reassessment can be initiated only if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any....
The assessing officer is empowered to invoke section 147 of the Income Tax Act, if there is reason to believe that the income chargeable to tax has escaped assessment, even in cases where no assessme....
Point of Law : Court satisfied that there was prima facie material available on record before the assessing officer for issuing a notice for reassessment and the notice under Section 148.
A defective return cannot be regarded as an invalid return.
The court emphasized the need for tangible material to believe that income had escaped assessment and held that the power to grant approval for re-opening an assessment is coupled with a duty and can....
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