2022 (7) TMI 1338 - HC - Income Tax

Reopening of assessment u/s 147 - change of opinion - HELD THAT - Mere change of opinion on the same materials set aside the reassessment notice and the consequential assessment order by its judgment in M/s. Tuff Tubes (Orissa) Pvt. Ltd. v. The Deputy Commissioner of Income Tax Corporate Circle-1(2) Bhubaneswar 2022 (2) TMI 1228 - ORISSA HIGH COURT This Court quashes the notice issued to the Petitioner u/s 148 of the Act and the consequential order dated 26th May 2021 of the NAFAC rejecting the objections of the Petitioner to the reopening of the assessment.

Summary

Issues involved:
Challenge to notice under Section 148 of the Income Tax Act and subsequent rejection of objections to reopening of assessment.

Analysis:
1. The petitioner challenged a notice issued under Section 148 of the Income Tax Act, 1961, and the subsequent order rejecting objections to the reopening of assessment for the Assessment Year 2014-15.

2. The original assessment for the said year was completed on scrutiny by an assessment order dated 30th December, 2016.

3. The petitioner had previously challenged the assessment order and a notice under Section 143(2) in a writ petition, which resulted in the notice being set aside due to lack of jurisdiction of the issuing authority.

4. The petitioner did not appeal the assessment order dated 30th December, 2016, as confirmed by the petitioner's counsel.

5. Upon receiving reasons for reopening the assessment, the petitioner filed objections citing a change of opinion rather than new material as the basis for reopening. The objections were rejected by the National Faceless Assessment Centre (NAFAC).

6. The court heard arguments from both the petitioner's counsel and the standing counsel for the IT Department.

7. The reasons provided for reopening the assessment referred to the tax audit report and information from the petitioner's books of accounts, indicating a significant profit margin on medicine sales. This was similar to the information in the original assessment order.

8. The Supreme Court's decision in Commissioner of Income Tax v. Kelvinator of India Ltd. highlighted the need for a valid "reason to believe" for reopening assessments, cautioning against arbitrary use of the power based on a mere change of opinion.

9. The court cited a previous judgment where reassessment was set aside due to a mere change of opinion on the same materials.

10. Consequently, the court quashed the notice under Section 148 and the order rejecting objections to the reopening of assessment, based on the lack of valid grounds for reassessment.

11. The writ petition was allowed without costs, and an urgent certified copy was ordered to be issued as per rules.