2017 (8) TMI 650 - HC - Income Tax

Validity of reopening of assessment - subsequent notice - change of opinion as the officers are different - Held that - There is no factual difference for reopening the assessment as proposed in the first notice and as presently proposed in the impugned notices. The only difference being the language, as the officers are different. The same documents which formed the basis for reasons for reopening and issuance of notice dated 25.01.2001 is identical to that of the reasons, which are set out for the issuance of the impugned notice. Further the petitioner was kept completely in the dark about the closing of the proceedings on technical grounds, stated to be endorsed on 31.03.2002 and the Officers, who endorsed the same was very well aware that it will be a time barred assessment if anything is not done within the said date as already reassessment proceedings were commenced and the petitioner is being heard in the matter. Therefore, find that there is no fresh material in possession of the Assessing Officer suggesting escapement of the income at the time of issuance of notice dated 25.01.2001. Thus it is a clear case where the respondent is attempting to reopen a settled issue with no fresh materials and therefore, the impugned notice is wholly without jurisdiction as it is a mere change of opinion. - Decided in favour of assessee.

Summary

Issues:
Challenge to notices issued under Section 148 of the Income Tax Act for assessment years 1997-98 and 1998-99; Jurisdiction of the respondent to issue a second notice after the first notice was technically dismissed; Compliance with legal requirements for issuing a fresh notice under Section 148; Validity of the second notice in the absence of fresh material; Application of legal principles regarding reopening of assessments.

Analysis:
The petitioner filed writ petitions seeking to quash notices issued by the respondent under Section 148 of the Income Tax Act for assessment years 1997-98 and 1998-99. The petitioner had entered into a sale agreement for agricultural lands and received sale consideration in the relevant accounting years. The assessment for 1997-98 was completed without capital gains tax, but for 1998-99, the assessment was reopened to consider capital gains. The respondent issued a notice in 2001 for reassessment of 1997-98, dropped it in 2002, and issued a fresh notice in 2002. The petitioner argued that the second notice was without jurisdiction due to the earlier notice and lack of fresh material. The respondent claimed the second notice was proper as per Section 148 and sought the petitioner's participation in assessment proceedings.

The Court examined the timeline of events, noting the petitioner's compliance with the first notice and the subsequent technical dismissal in 2002. The respondent's argument relied on obtaining necessary approval for a fresh notice. The Court referenced a Punjab and Haryana High Court judgment regarding issuing fresh notices under Section 148. It highlighted that issuing a fresh notice is permissible if new material suggests income escapement. However, in this case, no fresh material existed, making the second notice a mere change of opinion. The Court found the second notice without jurisdiction and set aside the impugned orders, allowing the writ petitions.

In conclusion, the Court held that the respondent's attempt to reopen a settled issue without fresh material was unjustified, rendering the second notice invalid. The judgment emphasized the importance of adhering to legal requirements and avoiding arbitrary reopening of assessments based on a mere change of opinion.