The reopening of tax assessment based on previously considered issues constitutes a change of opinion and is fundamentally invalid without new, tangible evidence.

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 dated 21.07.2022 issued under section 148 of the INCOME TAX ACT , 1961 [for short ‘the Act’] for A.Y. 2016-17.

3. The petitioner is engaged in the business of manufacturing grey cloth under the name and style of M/s. Pratiman Traders- a proprietary concern. The petitioner incurred interest expenses of Rs. 7,08,390/- and Rs. 2,56,715/- against interest income on fixed deposits of Rs. 14,25,294/- and other interest income of Rs. 18,13,321/- respectively.

4. Case of the petitioner was selected for limited scrutiny. By the show-cause notice dated 31.10.2018, petitioner was called upon to show cause as to why various additions proposed therein should not be made in the hands of the petitioner and including the proposed disallowance of interest expenses as stated here-in-above.

5. The petitioner, by reply dated 01.11.2018, provided the information along with ledger of interest income received on the bank FDR, ledger account of the interest expenses, bank overdraft statement and details of overdraft expenses, confirmation of lender, ITR and bank statement of lender.

6. The Assessing Officer passed assessment order dated 13.11.2018 under section 143(3) of the Act accepting the returned income.

7. The respondent issued the show-cause notice under section 148 read with Taxation and other Laws [Relaxation and Amendment of Certain Provisions] Act on 31.03.2021 for the Assessment Year 2016- 17. However, the same was considered as notice under section 148A(b) of the Act as per the directions issued by the Hon’ble Supreme Court in case of Union of India vs. Ashish Agrawal reported in [2022] 138 taxmann.com 64 and thereafter, the petitioner was provided the details relied upon by the respondent on 27.05.2022. The petitioner filed explanation and reply dated 10.06.2022 and thereafter, the notice under section 148 of the Act dated 21.07.2022 and impugned order dated 21.07.2022 under section 148A(d) of the Act were issued. Therefore, as per the decision of the Hon’ble Apex Court in case of Union of India vs. Rajeev Bansal reported in 469 ITR 46 (SC) , the impugned notice is within the surviving time.

8. Learned Senior Advocate Mr. Tushar Hemani for the petitioner submitted that impugned order as well as the notice is without jurisdiction as the same were issued on mere change of opinion as the very issue of disallowance of interest was considered by the Assessing Officer during regular course of assessment. In support of his submissions, reliance was placed on the decision of Rasna (P.) Ltd vs. Deputy Commissioner of Income Tax reported in [2025] 174 taxmann.com 930 (Gujarat) wherein, in similar facts, it was held by this Court as under:

“29. Therefore, even when the notice under section 148 is issued after 01.04.2021, “the respondent Assessing Officer could not have assumed the jurisdiction to reopen the assessment on mere change of opinion, while exercising power to reopen the assessment by the respondent Assessing Officer under section 147 of the Act, subject to the provision of sections 148 to 153 of the Act.

30. On perusal of the provisions of section 147 of the Act, assessment or reassessment can be undertaken by the Assessing Officer if there is escapement of taxable income and for that purpose, the proviso to section 148 provides that no notice shall be issued if information leading to escapement of income is not available with the Assessing Officer but converse is not true that all informat