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2016 Supreme(Guj) 1321
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Akil Abdul Hamid Kureshi, A.J. Shastri, JJ.
Doshi Chemicals Pvt. Ltd. - Appellant
Vs.
Income Tax Officer Ward 1(4) - Respondent
Special Civil Application No. 8184 of 2014
Decided On : 20-07-2016
Advocate Appeared:
For the Appellant : Hardik V. Vora
For the Respondent: Mauna M. Bhatt
Reassessment based on a change of opinion is impermissible, and if the issue has already been thoroughly examined in the scrutiny assessment and the petitioner has fully declared all materials, it is not permissible for the authority to reopen the assessment.
Headnote:
Section 148 - Reopening of Assessment - Income-Tax Act 1961 - Section 148
Fact of the Case:
The petitioner challenged the legality and validity of a notice issued under Section 148 of the Income-Tax Act 1961 for reopening of assessment for the assessment year. The petitioner's case had already been subjected to scrutiny assessment and the Assessing Officer had accepted the return of income filed by the petitioner Company.
Finding of the Court:
The Court found that the attempt to reopen the assessment was impermissible as the issue of depreciation had already been thoroughly examined in the scrutiny assessment, and the authority was trying to adopt a different view by interpreting Section 32(1) in a different context. The Court held that reassessment based on a change of opinion is impermissible and since the petitioner had fully declared all materials, it was not permissible for the authority to reopen the assessment.
Issues: The legality and validity of the notice issued under Section 148 of the Income-Tax Act 1961 for reopening of assessment.
Ratio Decidendi: Reassessment based on a change of opinion is impermissible. If the issue has already been thoroughly examined in the scrutiny assessment and the petitioner has fully declared all materials, it is not permissible for the authority to reopen the assessment.
Final Decision: The Court quashed and set aside the impugned notice issued under Section 148 of the Income-Tax Act 1961, thereby allowing the petition to that extent.
A.J. Shastri, J.
1. By way of present petition, the petitioner is challenging the legality and validity of notice dated 8.7.2013 issued under Section 148 of the Income-Tax Act 1961 (for short 'the Act') for reopening of assessment for the assessment year.
2. The case of the petitioner is that the petitioner Company is dealing in the business of manufacturing and trading the chemicals and plant of the Company is located at Ankleshwar. The return of income for the relevant year was filed by the Company declaring loss of Rs. 23,27,909/- and return of said income was accompanied with the audit report prepared under Section 44AB of the Act. The petitioner's case came to be selected for scrutiny assessment by issuing notice under Section 143(2) of the Act and the assessee has offered in his return book profit of Rs. (-) 1,25,774/- and total income at Rs. (-) 23,27,909/-. After making the detailed inquiry, the Assessing Officer has accepted the return of income filed by the petitioner Company and a detailed order came to be passed on 3.5.2010.
3. It is also the case of the petitioner that even despite the full discloser by the petitioner and despite the scrutiny assessment done at length, the respondent authority has issued notice under Section 148 of the Act on 8.7.2013 for reassessing the income of the petitioner by assuming jurisdiction for the year 2009-10 on the premise that income has escaped assessment. The petitioner, upon receipt of the notice on 17.1.2014, requested the respondent authority to treat the original return of income as the return of income in response to the above notice and requested the authority to supply the reasons which are recorded for the purpose of issuance of notice. Vide letter dated 13.2.2014, the respondent authority has assigned and supplied the reasons which are recorded for reopening the assessment for the assessment year 2009-10.
4. Upon receipt of the same, the petitioner Company by way of their letters dated 15.5.2014 and 20.5.2014, filed the objections against notice for reopening of assessment proceedings which are sought to be initiated. However, without looking at the same, it is the case of the petitioner that said objections came to be rejected vide order dated 22.5.2014 and it is in the background of these facts, the present petition is brought before this Court for challenging the legality and validity of the notice issued under Section 148 of the Act.
5. Mr. H.V. Vora, learned counsel appearing on behalf of the petitioner has contended before the Court that the scrutiny assessment has already been undertaken in view of Section 143(3) of the Act and any inquiry which is thereafter to be made by the Assessing Officer would tantamount to a change of opinion. Learned counsel has also submitted that a mere change of opinion would not permit the authority to reopen the assessment which has already become final. It was further contended that it is settled position of law that even on the basis of audit objections also, reassessment is impermissible. Learned counsel also submitted that merely on the basis of audit query and report, the assessment which has become final may not be permitted to be reopened. It was also pointed out that the issue pertaining to depreciation which has been dealt with by the scrutiny assessment authority as well and the reasons which are assigned and supplied to the petitioner are not legally tenable. Learned counsel also submitted that the claim for depreciation has already been considered by the Assessing Officer at the relevant point of time and therefore, no such review of the said exercise be allowed to be undertaken under the guise of opening of assessment. Hence, in this context by contending this, learned counsel for the petitioner requested the Court to set aside the impugned notice issued under Section 148 of the Act.
6. To oppose the petition, Mrs. Mauna Bhatt, learned counsel submitted on behalf of the revenue that the notice which has been issued
