2023 (10) TMI 781 - HC - Income Tax

Validity of reopening of assessment as per new regime introduced u/s 148A - Authority to AO enquire into the same issues which were subject matter of the earlier assessment proceeding under New regime - HELD THAT - As notice issued u/s142(1) of the Act would show that the same set of allegations were made against the petitioner/assessee, which were the subject matters of the assessment order dated 31.03.2022. Therefore, in our view, as submitted by petitioner/assessee, there has been a change of opinion. The stand taken by respondents/revenue, that under the new regime the AO could in effect reopen the assessment proceedings by traversing the same path and enquire into the same issues which were subject matter of the earlier assessment proceeding, is not tenable in law. New regime has not veered away from the well-established principle that the re-assessment proceedings cannot be triggered qua aspects vis-a-vis which the AO has already formed an opinion. Thus, for the foregoing reasons, we are inclined to allow the writ petition. Accordingly, the notice issued u/s 148A(b), the impugned order passed under Section 148A(d) and the consequent notice of even date issued under Section 148 of the Act are set aside. Decided in favour of assessee.

Summary

Issues Involved:
1. Change of Opinion
2. Validity of Reassessment Proceedings
3. Application of New Regime under Finance Act, 2021

Summary:

The writ petition concerns Assessment Year (AY) 2014-15. Notice was issued on 30.11.2022, returnable on 17.02.2023, with a stay on reassessment proceedings initiated via notice dated 29.07.2022 under Section 148 of the Income Tax Act, 1961. Despite multiple opportunities, the respondents/revenue did not file a counter-affidavit.

The petitioner/assessee claims that the reassessment proceedings were initiated based on a change of opinion, as the allegations were already addressed in the assessment order dated 31.03.2022 under Section 147 read with Sections 144 and 144B. The notice dated 16.12.2021 under Section 142(1) outlined specific transactions, to which the petitioner/assessee responded, and a personal hearing was granted before the assessment order was passed.

Post the Finance Act, 2021, the respondents/revenue issued a notice dated 02.06.2022 under Section 148A(b), referencing the Supreme Court judgment in Union of India vs. Ashish Agarwal (2022). However, the assessment proceedings had already concluded on 31.03.2022, covering the same aspects as the new notice.

The petitioner/assessee responded to the notice on 06.06.2022, arguing against the reassessment, but the AO proceeded with the reassessment, culminating in the impugned order dated 29.07.2022 under Section 148A(d). The AO's order reiterated the same allegations addressed in the earlier assessment order.

The court found that the reassessment proceedings were based on a change of opinion, which is not permissible. The new regime under the Finance Act, 2021, does not allow reopening assessments on issues already examined. Thus, the court allowed the writ petition, setting aside the notice dated 02.06.2022, the impugned order dated 29.07.2022, and the consequent notice under Section 148 of the Act.

The writ petition was disposed of accordingly, with parties to act based on the digitally signed copy of the order.