2021 (12) TMI 367 - HC - Income Tax

Reopening of assessment u/s 147 - validity of reasons to believe - HELD THAT - AO had applied his mind to the documents and records produced before him by the Assessee. This included the balance sheet, P L Accounts and other relevant documents. It is plain, therefore, that the reopening of the assessment was not based on any new material. The law in relation to the reopening of the assessment, particularly after the original assessment was a scrutiny assessment under Section 143 (3) of the IT Act, has been explained in detail in a number of decisions of the Supreme Court of India. Section 147 of the Act itself has undergone changes over the years. The legal position emerging on an analysis of the decisions and the legislative changes has been summarized succinctly by the Supreme Court of India in CIT, Delhi v. Kelvinator of India Limited 2010 (1) TMI 11 - SUPREME COURT Similar circumstances in M/s. Sri Jagannath Promoters Builders v. Deputy Commissioner of Income Tax 2021 (10) TMI 1216 - ORISSA HIGH COURT quashed the notice issued u/s 148. The facts of the present case being more or less similar, the impugned notice is hereby quashed. The writ petition is allowed.

Summary

Issues:
Challenge to notice under Section 148 of the Income Tax Act, 1961 for reopening assessment for AY 2009-10 based on change of opinion.

Analysis:
The writ petition challenges a notice issued under Section 148 of the Income Tax Act, 1961 seeking to reopen the assessment for the assessment year 2009-10. The petitioner, a proprietorship concern, had filed the return disclosing total income. The assessing officer passed the assessment order after scrutiny, estimating income from various businesses. The impugned notice for reassessment stated reasons for reopening, alleging certain income had escaped assessment. The petitioner contended that the reassessment was based on a change of opinion, with no new material. Despite directions, the department failed to respond. The reasons for reopening indicated a revisit of existing records, with no fresh evidence. The assessing officer had previously estimated profits for each business based on documents provided. The law on reopening assessments post-scrutiny has been outlined by the Supreme Court, emphasizing the need for tangible material to justify reopening. A recent judgment quashing a similar notice under Section 148 further supports the petitioner's claim. Consequently, the court quashed the impugned notice, allowing the writ petition without costs, emphasizing the similarities with the earlier judgment.