2025 (1) TMI 1299 - HC - Income Tax

Validity of Reopening of assessment - change of opinion - HELD THAT - The impugned notice and the reasons recorded on the basis of the same facts which were already considered during the regular assessment proceedings are nothing but a mere change of opinion by the respondent AO to reopen assessment ignoring the details and the replies filed by the petitioner available on record. Decided in favour of assessee.

ISSUES PRESENTED and CONSIDERED

The primary legal issue considered by the Court was whether the notice issued under section 148 of the Income Tax Act, 1961 for reopening the assessment of the Assessment Year 2016-17 was valid. Specifically, the Court examined whether the issuance of the notice was based on a mere change of opinion by the Assessing Officer, given that the same facts had already been considered during the regular assessment proceedings.

ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

The legal framework involved the provisions of the Income Tax Act, 1961, particularly section 148, which pertains to the reopening of assessments. The Court considered the principles governing the reopening of assessments, including the necessity for the Assessing Officer to have tangible material or information to justify the reopening, rather than relying on a mere change of opinion.

Court's Interpretation and Reasoning

The Court interpreted the issuance of the notice under section 148 as unjustified because it was based on the same facts previously examined during the regular assessment proceedings. The Court emphasized that the reopening of an assessment cannot be justified on the grounds of a change of opinion by the Assessing Officer. The Court relied on established precedents which assert that reassessment requires new tangible material or information that was not considered during the original assessment.

Key Evidence and Findings

The key evidence considered by the Court included the sequence of notices issued to the petitioner and the replies submitted by the petitioner. The petitioner had provided detailed information regarding the purchase of immovable property worth Rs. 6,00,00,000/-, including the source of funds, which was a gift received by her son. The Assessing Officer had accepted the returned income of Rs. 13,98,440/- during the original assessment proceedings.

Application of Law to Facts

The Court applied the legal principles governing the reopening of assessments to the facts of the case. It concluded that the reasons recorded for the issuance of the notice under section 148 were based on the same facts that had already been scrutinized during the original assessment. The Court found no new material or information that could justify the reopening of the assessment.

Treatment of Competing Arguments

The Court considered the arguments presented by both parties. The petitioner argued that the reopening was based on a mere change of opinion, which is impermissible under the law. The respondent contended that the reopening was justified due to the discrepancy between the declared income and the investment in the property. However, the Court found that the respondent's argument lacked merit as the same issue had been addressed during the original assessment.

Conclusions

The Court concluded that the issuance of the notice under section 148 was not warranted as it was based on a mere change of opinion. The Court held that the reopening of the assessment was unjustified and quashed the notice.

SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning

The Court stated, "Considering such facts, it is apparent that the impugned notice and the reasons recorded on the basis of the same facts which were already considered during the regular assessment proceedings are nothing but a mere change of opinion by the respondent Assessing Officer to reopen assessment ignoring the details and the replies filed by the petitioner available on record."

Core Principles Established

The core principle established by the Court is that the reopening of an assessment under section 148 requires new tangible material or information that was not considered during the original assessment. A mere change of opinion by the Assessing Officer does not justify the reopening of an assessment.

Final Determinations on Each Issue

The Court determined that the notice issued under section 148 for reopening the Assessment Year 2016-17 was invalid. The Court quashed and set aside the impugned notice, thereby allowing the petitioner's challenge to the reopening of the assessment. The rule was made absolute to the extent of quashing the notice, with no order as to costs.

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