2023 (12) TMI 650 - HC - Income Tax

Reopening of assessment - notice has been received after expiry of four years - Reason to believe - capital gain of the sale of property - HELD THAT - In our view, the notice impugned as well as the order of disposing objections have to be quashed and set aside. We are in agreement with the submissions made by assessee. Admittedly, assessment was completed under section 143(3) of the said Act and assessment order came to be passed assessing Petitioner s income at Rs. 82,07,933/- against disclosed income at Rs. 81,23,993/-. The entire basis for reason to believe is accessed from Petitioner s record and there is nothing to indicate that there was any failure on the part of Petitioner to disclose fully and truly all material facts necessary for his assessment. Assessing Officer has made bald allegations that even though the assessee has produced books of account, profit and loss account balance sheet and other evidence, no requisite material facts, as noted in the reasons for reopening, were embedded in such a manner that material evidence could not be discovered. In our view, this has been made only to get over the fetters as held in Calcutta Discount Co. Ltd. V. Income-Tax Officer 1960 (11) TMI 8 - SUPREME COURT . Moreover undisputedly query was raised during the assessment proceedings and Petitioner has provided the details vide letter dated 31.10.2014 on capital gain of the sale of property. Just because the same is not referred to in the assessment order, it does not mean that the query raised was not the subject matter of consideration while completing the assessment. As held by the Division Bench of this Court in Aroni Commercials Ltd. 2014 (2) TMI 659 - BOMBAY HIGH COURT it is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of query raised. This is a clear case where the reopening of the assessment is merely on the basis of change of opinion of the Assessing Officer from that held earlier during the course of assessment proceeding. This change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment. Decided in favour of assessee.

Summary

Issues involved:
The judgment involves challenging a notice under section 148 of the Income Tax Act, 1961 and the order disposing objections to the reopening of assessment for the assessment year 2012-13.

Details of the judgment:
1. The petitioner, who was the Managing Director of a company, filed an income tax return for the assessment year 2012-13. The assessment was completed under section 143(3) of the Income Tax Act, with the income assessed at Rs. 82,07,933.

2. The petitioner received a notice under section 148 of the Income Tax Act, stating that there were reasons to believe the income had escaped assessment due to incorrect exemption claimed under section 54B. The assessing officer believed that the petitioner was not eligible for the exemption claimed.

3. The petitioner argued that there was no failure to disclose fully and truly all material facts necessary for assessment. It was highlighted that during the assessment proceedings, a query was raised regarding the capital gain on the sale of a property, and the petitioner had responded to this query with relevant details.

4. The court noted that the reasons for reopening the assessment were based on records available with the petitioner and there was no indication of any failure to disclose material facts. The court emphasized that the assessing officer's allegations were merely an attempt to bypass legal requirements.

5. It was further pointed out that even though the query raised during assessment proceedings was not explicitly mentioned in the assessment order, it did not mean that the matter was not considered. The court cited a previous judgment to support this view.

6. The court concluded that the reopening of the assessment was merely a change of opinion by the assessing officer and did not constitute valid reasons to believe that income had escaped assessment. As a result, the court quashed the notice under section 148 and the order disposing objections to the reopening of assessment.

7. The court granted the petitioner's prayer to issue a Writ of Certiorari to quash and set aside the impugned notice and the subsequent order disposing of objections.

Conclusion:
The High Court of Bombay quashed the notice under section 148 of the Income Tax Act, 1961, and the order disposing objections to the reopening of assessment for the assessment year 2012-13, based on the lack of valid reasons to believe that income had escaped assessment.