2018 (10) TMI 1758 - HC - Income Tax

Reopening of assessment u/s 147 - HELD THAT - Change of Opinion expressly refers to the factual position and particularly, the show cause notice sent by the AO dated 26 th December, 2013. In this show cause notice, the transaction of purchase and sale of shares of M/S Nivyah Infrastructure and Telecom Services Ltd. (erstwhile M/S S.V. Electricals Ltd. ) was expressly referred and inquiry was sought to be made by seeking an explanation. The assessee replied to this letter on 6 th January, 2014 and claims to have given complete details of this transaction. Prima facie, therefore, and in the absence of any reasons set out in the affidavit in reply, we do not think that we should allow the AO to go ahead with the implementation of the impugned notice issued under Section 148 and order rejecting the objections of the assessee dated 20th August, 2018. Hence, there will be an ad interim order in terms of prayer clause (d) of the Writ Petition.

Summary

Issues:
1. Admissibility of Writ Petition challenging the show cause notice issued under Section 148 of the Income Tax Act, 1961.

Analysis:
The High Court, comprising S.C. Dharmadhikari and B.P. Colabawalla, JJ., after hearing both parties, found arguable questions raised in the Writ Petition and admitted it. The Court carefully examined the grounds in the petition, specifically focusing on the "Change of Opinion" under the factual position, related to the show cause notice sent by the Assessing Officer on 26th December, 2013. The notice pertained to the transaction of purchase and sale of shares of 'M/S Nivyah Infrastructure and Telecom Services Ltd.' The assessee responded to this notice on 6th January, 2014, providing detailed information on the transaction. The Court, without any reasons presented in the affidavit in reply, decided not to allow the Assessing Officer to proceed with the implementation of the impugned notice under Section 148 of the Income Tax Act, 1961, and the order rejecting the objections of the assessee dated 20th August, 2018. Consequently, an ad-interim order was issued in line with the prayer clause (d) of the Writ Petition.

The respondents waived service in this case, indicating their acknowledgment of the proceedings without requiring formal service. This decision signifies the Court's intervention in preventing the Assessing Officer from taking further action based on the disputed notice, considering the lack of substantial reasons provided in the response affidavit. The Court's detailed analysis of the grounds raised in the Writ Petition, particularly concerning the transaction of shares, showcases a thorough examination of the factual and legal aspects involved. By granting an ad-interim order, the Court temporarily restrains the Assessing Officer from proceeding with the notice until further deliberation and resolution of the raised issues in the petition.