IMPORTANT POINT
Reopening of assessment under the Income Tax Act based on previously scrutinized issues constitutes a mere change of opinion and is impermissible without new material.

JUDGMENT :

Bhargav D. Karia, J.

1. Heard Mr. Hardik Vora, learned advocate for the petitioner and Mr.Varun Patel, learned Senior Standing Counsel for the respondent.

2. Having regard to the controversy involved, which is in narrow compass, with the consent of learned advocates for the respective parties, the matter is taken up for final hearing.

3. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the notice dated 27th March, 2021 issued by the respondent -Assessing Officer under Section 148 of the Income Tax Act, 1961 (for short “the Act”) for the Assessment Year 2016-17.

4.1 The petitioner is a limited liability partnership firm. The petitioner firm filed its return of income for Assessment Year 2016-17 declaring total income of Rs.46,05,780/- on 30th September, 2016.

4.2 The case of the petitioner was selected for scrutiny and notice under Section 142(1) of the Act was issued on 10.10.2018. The petitioner was called upon to furnish the details of loan outstanding at the beginning of the year, the loans taken during the year including the squared up loans in the prescribed format.

4.3 The petitioner submitted the reply on 10.12.2018 providing the details of the unsecured loan. The petitioner filed the another reply along with the confirmation statement and acknowledgment of income returns of the parties who have advanced the loan. The petitioner by letter dated 12.12.2018 also submitted the cross account of Shreenathji Corporation, confirmation account of Rahulkumar Babulal Doshi and bank statement of Phoolchand Exports Pvt. Ltd. before the Assessing Officer.

4.4 The Assessing Officer after considering the replies filed by the petitioner passed an Assessment Order under Section 143(3) of the Act accepting the return of income on 12.12.2018.

4.5 The respondent issued the notice under Section 148 of the Act recording the following reasons:-

“1. Brief details of the assessee:In this case, the assessee had filed its return of income for AY 2016-17 on 30.09.2016 declaring total income of Rs.46,05,780/-. Thereafter, the case was selected for scrutiny and assessment u/s.143(3) of the Income- Tax Act for A.Y. 2016-17 was finalized on 12.12.2018 accepting the returned income as assessed income.

2. Brief details of Information collected/received by the AO:On perusal of assessment records, it is noticed that assessee has introduced unsecured loan of Rs.5,14,00,000/- from unrelated business concern, Phulchand Export Pvt. Ltd. with a lesser rate of interest. In support of the loan, assessee submitted bank statement and ITR of the loan giver. It was noticed from ITR that gross total income of Phulchand Exports Pvt. Ltd. was NIL with current year loss of Rs. 14,19,11,427/-. It was also noticed from the bank statement of loan giver that huge amount of cash was accepted before and after issue of cheque to assessee. Thus, creditworthiness and genuineness of the unsecured loan, such as having sufficient surplus saving and funds backed by capital assets to provide loan to assessee, was not established. Therefore, the said loan should be treated as unexplained u/s.68 of the Income tax Act and should be added to income of the assessee.”

4.6 The petitioner filed the objections to the notice of reopening on 31.07.2021 contending inter alia that the reasons recorded clearly shows that there is mere change of opinion of the respondent Assessing Officer, as the issue pertaining to the unsecured loan from Phulchand Export Pvt. Ltd. was considered during the original assessment proceedings by the Assessing Officer and the petitioner has made full and true disclosure of all material facts relevant for the assessment including the confirmation statement, acknowledgment of the ITR and bank statement of the said parties before the Assessing Officer.

4.7. The respondent-Assessing Officer by order dated 23rd March, 2024 disposed of the objections filed by the petitioner. Being aggrieved, the petitioner has preferred this petiti