2023 (4) TMI 958 - HC - Income Tax

Reopening of assessment u/s 147 - Change of opinion - reasons to believe - excess claim of bad debts - Notice issued beyond a period of four years - HELD THAT - This re-opening is sought for is on the basis of assessment record itself, which assessment record undisputedly consist of the explanation about excess claim of bad debts and this re-opening is not on the basis of any fresh tangible material from what was forming part of assessment proceeding itself and as such in view of this when there is no fresh tangible due material distinct from what was very much available, the re-opening in such circumstance is impermissible as is well propounded in case of Shanti Enterprise 2016 (9) TMI 1614 - GUJARAT HIGH COURT Case on which undisputedly notice for re- opening is issued beyond a period of four years and in the absence of any fresh tangible material and during the course of assessment the specific questions have been raised, which is already indicated above, and the answers and explanations were put-forth for consideration and scrutiny during the assessment proceedings and despite such material available on hand, the AO has not thought it fit to make any addition with regard to aforesaid claim and as such when the material was very much available and accepted by the Assessing Officer while passing the assessment order now to re- open that issue again is appearing to be based upon change of opinion and in view of law laid down by the Court in case of Premium Finance Pvt. Ltd. 2016 (9) TMI 706 - GUJARAT HIGH COURT and Gujarat State Board of School Texbooks 2016 (10) TMI 775 - GUJARAT HIGH COURT such change of opinion cannot formed on the basis of re-opining of assessment No re-opening is permissible merely on the basis of change of opinion. Decided in favour of assessee.

Issues Involved:
1. Legality and validity of the impugned order dated 09.11.2021 and the impugned notice dated 26.03.2021 issued by the respondent authority.
2. Implementation and execution of the impugned notice at Annexure-A.
3. Stay of further proceedings for assessment and recovery for Assessment Year 2015-16.
4. Re-opening of assessment beyond the period of four years.
5. Allegation of failure to disclose fully and truly all material facts.

Summary:

Issue 1: Legality and Validity of Impugned Order and Notice

The petitioner, a private sector bank, challenged the legality and validity of the impugned order dated 09.11.2021 and the impugned notice dated 26.03.2021 under Article 226 of the Constitution of India. The petitioner argued that the notice under Section 148 of the Income Tax Act was issued without fresh tangible material and beyond the period of four years, making it impermissible. The Court found that the reasons recorded for reopening the assessment were based on the same material already examined during the original assessment, thus constituting a mere change of opinion, which is not permissible.

Issue 2: Implementation and Execution of Impugned Notice

The petitioner sought the implementation and execution of the impugned notice at Annexure-A. The Court noted that the assessing officer had already examined the issues during the original assessment proceedings, and no new material was presented to justify reopening the assessment. Therefore, the impugned notice was deemed unsustainable.

Issue 3: Stay of Further Proceedings

The petitioner requested a stay on further proceedings for assessment and recovery for Assessment Year 2015-16. The Court had earlier directed the authorities not to issue any final order without the leave of the Court. Upon reviewing the case, the Court found that reopening the assessment was not justified, thus granting the stay on further proceedings.

Issue 4: Re-opening of Assessment Beyond Four Years

The petitioner argued that the reopening of the assessment was beyond the period of four years and without fresh tangible material. The Court agreed, stating that the reopening was based on the same material already scrutinized during the original assessment, which is not permissible as per the settled proposition of law. The Court cited several judgments supporting this view, including "Shanti Enterprise v. I.T.O." and "Intercontinental (India) v. Dy. CIR."

Issue 5: Allegation of Failure to Disclose Material Facts

The respondent authority claimed that the petitioner had failed to disclose fully and truly all material facts. However, the Court found that the petitioner had provided detailed explanations and relevant documents during the original assessment proceedings. Therefore, the allegation of non-disclosure was not accepted. The Court cited the case of "Anupam Rasayan India Ltd. v. Income-tax Officer" to support its conclusion that there was no failure on the part of the petitioner to disclose material facts.

Conclusion:

The Court quashed and set aside the impugned notice dated 26.03.2021 and the impugned order dated 09.11.2021. The petition was allowed, and the reopening of the assessment was deemed impermissible due to the lack of fresh tangible material and the fact that it was based on a mere change of opinion.

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