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2024 (10) TMI 1482 - HC - Income TaxValidity of reopening of assessment - notice issued after expiry of normal period of limitation that is four (4) years - change of opinion - tangible materials material found or not? - HELD THAT - Petitioner had furnished all the documents required for completing the assessment u/s 143(3) of the Income Tax Act, 1961. In the returns that was filed by the Petitioner on 15.09.2013, the Petitioner has disclosed the entire amount received under the aforesaid Agreement but claimed as capital gains instead of treating them as business income. Since the assessment was completed after furnishing all the documents including the two mentioned agreement, it has to be construed that the Impugned Order is inspired from change of opinion and therefore, it has to be quashed in the light of the decision of Kelvinator of India Limited 2010 (1) TMI 11 - SUPREME COURT Since the notice itself has been issued after expiry of four (4) years, the Department could have invoked Section 147 only if tangible materials were available and that there was failure on the part of the Petitioner to disclose materials/documents and informations which were required for completing the assessment u/s 143(3) of the Income Tax Act, 1961. Decided in favour of assessee.
Issues: Challenge against Impugned Notice under Section 148 of the Income Tax Act, 1961 and consequential Order overruling objection of Petitioner, Prematurity of Writ Petition, Compliance with assessment requirements under Section 143(3) of the Income Tax Act, 1961, Allegation of change of opinion in Impugned Order, Invocation of Section 147 of the Income Tax Act, 1961.
Analysis: The Petitioner challenged the Impugned Notice dated 20.03.2020 issued under Section 148 of the Income Tax Act, 1961, and the subsequent Order dated 03.09.2021 overruling the Petitioner's objection against the reopening of the assessment completed earlier under Section 143(3) of the Income Tax Act, 1961 on 04.03.2016. The challenge was primarily based on the grounds that the notice for reopening the assessment was beyond the normal limitation period of four years and was inspired by a change of opinion. The Petitioner contended that all required information was furnished during the assessment completed on 04.03.2016. The Petitioner had engaged in holding exhibitions and sold a business to another entity, accompanied by relevant agreements. The Petitioner argued that the Impugned Notice and Order should be set aside based on the decision of the Supreme Court in Commissioner of Income Tax vs. Kelvinator of India Limited (2010) and other related judgments. The Respondent's Senior Standing Counsel argued that the Writ Petition was premature and that the notice only reopened the assessment without making a final determination. It was stated that if an adverse order is passed, the Petitioner could appeal before the Appellate Commissioner. The Respondent relied on the Supreme Court's direction in GKN Driveshafts (India) Limited Vs. Income Tax Officer and Ors [2003] to support their position. After considering the submissions, the Court found that the Petitioner had provided all necessary documents for the assessment under Section 143(3) of the Income Tax Act, 1961. The Petitioner had disclosed the relevant amounts in the returns filed earlier but treated them as capital gains instead of business income. The Court concluded that the Impugned Order was based on a change of opinion and should be quashed, citing the decision in Commissioner of Income Tax vs. Kelvinator of India Limited. Additionally, since the notice was issued after the four-year limitation period, the Court held that Section 147 could only be invoked if tangible materials were not disclosed by the Petitioner, which was not the case here. Ultimately, the Writ Petition was allowed, providing the Petitioner with the consequential relief, and no costs were awarded.
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