2019 (12) TMI 265 - HC - Income Tax

Reopening of assessment u/s 147 - HELD THAT - We find that the reasons in support of the impugned notices which are identical (save difference in figures and addition of one more party in the subsequent Assessment Year 2012-13), were a subject matter of consideration by the Assessing Officer during the regular assessment proceedings leading to an order passed under section 143(3) of the Act. During the regular assessment proceedings in both the Assessment Years the very parties mentioned in the reasons for reopening leading to reason to believe that income chargeable to tax had escaped assessment were the subject matter of consideration while passing the order under section 143(3) of the Act. Therefore, prima facie the impugned notices appear to be based on change of opinion. Besides, there being no failure on the part of the Petitioner to disclose truly and fully all material facts necessary for assessment during regular assessment proceedings, the impugned notices are hit by the proviso to section 147

Summary

Issues:
Challenging notices under section 148 of the Income Tax Act for Assessment Years 2012-13 and 2013-14 based on change of opinion and failure to disclose material facts during regular assessment proceedings.

Analysis:
The High Court considered two petitions challenging separate notices issued by the Assessing Officer under section 148 of the Income Tax Act for the Assessment Years 2012-13 and 2013-14. The impugned notices sought to reopen assessments that had already been completed under section 143(3) of the Act. The Court noted that the notices were issued beyond the four-year period from the end of the relevant Assessment Year, invoking the proviso to section 147 of the Act. The reasons for reopening assessments were found to be identical, except for minor differences, and had already been considered during the regular assessment proceedings that led to the original orders under section 143(3) of the Act. It was observed that the parties mentioned in the reasons for reopening were already considered during the regular assessment, indicating a potential change of opinion by the Assessing Officer. Additionally, the Court found that there was no failure on the part of the Petitioner to disclose all material facts during the regular assessment, rendering the impugned notices in violation of the proviso to section 147 of the Act. Consequently, the Court held that the impugned notices lacked jurisdiction based on these reasons.

The High Court granted interim stay on the impugned notices dated 27 March 2019 for both petitions until their final disposal. This decision was made in light of the Court's prima facie finding that the notices were without jurisdiction due to the issues of change of opinion and failure to disclose material facts during the regular assessment proceedings. The stay was intended to prevent any immediate adverse actions resulting from the notices until a final decision could be reached on the validity of the assessments being challenged.