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BHARGAV D. KARIA, NIRAL R. MEHTA
Radhe Developers India Limited – Appellant
Versus
Assitant Commissioner Of Income Tax, Circle 3(1)(2) – Respondent
JUDGMENT :
BHARGAV D. KARIA, J.
1. Heard learned Senior Advocate Mr. S.N.Soparkar with learned advocate Mr. B.S.Soparkar for the petitioner and learned Senior Standing Counsel Mr. Karan Sanghani for learned advocate Mrs. Kalpana
K. Raval for the respondent.
2. Rule returnable forthwith. Learned Senior Standing Counsel Mr. Karan Sanghani waives service of notice of rule for the respondents.
3. 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.
4. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the notice dated 16.03.2020 passed by the Assistant Commissioner of Income Tax, Ahmedabad, under section 148 of the Income Tax Act, 1961 (for short ’the Act’)for A.Y.2013-14.
5. Brief facts of the case are that the petitioner filed return of income for A.Y. 2013-14 on 28.09.2013 declaring total income of ‘Nil’.
5.1 Case of the petitioner was reopened under section 148 of the Act and the reasons were supplied on 25.05.2016. The petitioner filed objections on 22.06.2016. The assessment was framed on 03.10.2016 under section 143(3) read with sect
The court established that the reopening of an assessment under section 148 requires a clear nexus with income escapement, which was not present in this case.
A notice under Section 148 of the Income Tax Act issued beyond four years without proper examination of material facts is invalid and lacks jurisdiction.
The court established that reopening assessments requires new material evidence, and Section 50C does not apply to stock in trade, reinforcing the principle against mere changes of opinion.
The Assessing Officer cannot reopen an assessment based solely on a change of opinion; valid reasons must exist to believe that income has escaped assessment.
The court established that reopening assessments requires a clear and valid reason to believe that income has escaped assessment, which was not present in this case.
The court emphasized the necessity for the Assessing Officer to apply due diligence and consider all evidence before concluding that income has escaped assessment.
Reopening of income tax assessments requires new information, not merely a change of opinion, to avoid arbitrary exercise of power.
The notice issued under Section 148A(b) of the Income Tax Act was invalid due to procedural errors, lacking necessary information on escaped income and failing to follow required inquiry protocols.
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.
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