Back
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Bhargav D. Karia, Niral R. Mehta, JJ.
Om Sai Metals- Petitioner
Versus
Assistant Commissioner Of Income Tax, Navsari Cirlce & Anr. – Respondents
R/Special Civil Application No. 4851 of 2022
Decided On : 29-07-2024
Income Tax - Reopening of Assessment - Income Tax Act, 1961 - Sections 147, 148, 151, 133A, 143(3) - The court held that reopening of assessment beyond four years without new tangible material constitutes a change of opinion, which is impermissible under the law.
Fact of the Case:
The petitioner, a partnership firm, challenged a notice under section 148 of the Income Tax Act for the assessment year 2015-16, claiming that the notice was issued beyond the permissible period and without new material facts.
Finding of the Court:
The court found that the reopening was based on previously considered material and did not constitute new tangible evidence, thus ruling it as a change of opinion, which is not permissible.
Issues: Whether the notice under section 148 was valid given that it was issued beyond four years and based on previously considered material.
Ratio Decidendi: The court emphasized that reopening assessments requires new tangible material and cannot be based on a mere change of opinion regarding previously assessed facts.
Result: The impugned notice under section 148 was quashed and set aside.
JUDGMENT :
BHARGAV D. KARIA, J.
1. Heard learned Senior Advocate Mr. Tushar Hemani with learned advocate Ms. Vaibhavi Parikh for the petitioner and learned Senior Standing Counsel Mr. Karan Sanghani for the respondent.
2. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the notice under section 148 of the Income Tax Act, 1961 (For short “the Act”) dated 04.05.2020 issued by the respondent for the Assessment Year 2015- 2016.
3. Rule returnable forthwith. Learned Senior Standing Counsel Mr. Karan Sanghani waives service of notice of rule on behalf of the respondent.
4. Having regard to the controversy involved which is in narrow compass, with the consent of the learned advocates for the parties, the matter is taken up for hearing.
5. Brief facts of the case are that the petitioner which is a partnership firm is engaged in the business of stone quarry and filed return of income for the year under consideration on 18.09.2015 declaring total income at Rs. 82,14,560/-.
5.1 The survey action under section 133A of the Act was carried out on 09.02.2016 and certain material was impounded as per which, total cash sale for the year under consideration was brought out at Rs. 2,16,15,655/- against which, cash sale reflected in the books aggregated to Rs. 1,37,21,441/-.
5.2 The petitioner therefore made disclosure of the difference between the total cash sales and the cash sales reflected in the books of Rs. 78,94,214/- (Rs.2,16,15,655-Rs.1,37,21,441) in respect of unaccounted cash sales. The petitioner thereafter filed revised return of income on 27.03.2016 declaring total income at Rs. 1,61,08,860/- including the disclosure of Rs. 78,94,214/-.
5.3 Thereafter the case of the petitioner was selected for scrutiny. Notice under section 142(1) of the Act dated 12.12.2017 was issued calling upon the petitioner to furnish various details and information including the details as to how the transactions appearing in the impounded documents have been reflected in the books of accounts and complete details and comments in respect of each and every paper impounded during survey proceedings.
5.4 The petitioner, by letter dated 26.12.2017, gave detailed explanation in relation to disclosure of Rs. 78.94 lakh made during the survey in respect of unaccounted cash sales and also furnished copy of revised return of income as well as computation of income evidencing the fact, such disclosure has been offered as income.
5.5 The Assessing Officer thereafter, during the course of hearing on 26.12.2017, called upon the petitioner to furnish explanation in relation to totaling error in impounded material which was provided by the petitioner vide letter dated 27.12.2017. It was contended by the petitioner that the figures reflected in the impounded material vis- a-vis unaccounted sales are duly disclosed. The petitioner also brought on record certain facts in relation to events which occurred during the course of survey and the manner, in which, the disclosure was made.
5.6 The Assessing Officer after considering the reply of the petitioner, framed the assessment vide order dated 29.12.2017 under section 143(3) of the Act without making any addition and accepting the disclosure of unaccounted cash sales.
5.7 The petitioner thereafter received the impugned notice dated 04.05.2020 under section 148 of the Act seeking to reopen the case for the year under consideration. The petitioner in response to the impugned notice, filed return of income on 04.06.2020 and further requested the respondent to supply copy of reasons recorded for reopening.
5.8 The respondent supplied the copy of reasons for reopening vide letter dated 17.06.2020 which reveals that case of the petitioner has been reopened merely on the count that the certain cash sales remained to be considered during the course of survey proceedings as well as the assessment proceedings, as during the course of assessment proceedings for the subsequent year i.e. the assessment year 2
Reopening of assessment under section 148 requires new tangible material; reliance on previously considered facts constitutes a change of opinion, which is impermissible.
Reopening of income tax assessments requires new tangible material; mere change of opinion is insufficient.
Reopening of assessment under the Income Tax Act requires tangible new material; mere change of opinion is insufficient.
Reopening of assessments under the Income Tax Act requires new material facts; mere change of opinion is insufficient.
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....
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 Assessing Officer must have tangible evidence linking the taxpayer to alleged income escape for valid reassessment under the Income Tax Act; mere suspicion is insufficient.
Reopening of assessment requires tangible material indicating income has escaped assessment; mere change of opinion is insufficient.
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.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
