2022 (2) TMI 537 - HC - Income Tax

Validity of reopening of assessment u/s 147 - change of opinion - HELD THAT - Petition was admitted on 14th July, 2014. First of all we have to note that the Assessing Officer has relied upon the order of the special Bench of the ITAT in the case of DCIT vs. Times Guaranty Limited 2010 (6) TMI 516 - ITAT, MUMBAI to form an opinion that Petitioner's income has escaped assessment and therefore it would be a fit case to reopen. This order of ITAT is dated 30th June, 2010 but the assessment of the Petitioner under section 143(3) of the Act was completed on 27 th December, 2010. Therefore, the original Assessing Officer had the legal position with him but still proceeded to pass the assessment order. Therefore, this is a clear case of change of opinion which is not permissible - Decided in favour of assessee.

Summary

Issues:
1. Validity of notice issued under section 148 of the Income Tax Act, 1961 for assessment year 2008-2009.

Analysis:
The High Court considered the reasons recorded for reopening, which highlighted discrepancies related to the carrying forward and set off of business losses and unabsorbed depreciation. The notice issued under section 148 was challenged by the Petitioner, arguing that the original Assessing Officer had the legal position available but still proceeded with the assessment order, indicating a clear case of impermissible change of opinion.

The court noted that the Assessing Officer relied on an ITAT order dated 30th June, 2010, in the case of DCIT vs. Times Guaranty Limited to justify the reopening of assessment. However, it was observed that the original assessment of the Petitioner was completed on 27th December, 2010, after the ITAT order. This discrepancy indicated a change of opinion by the Assessing Officer, which was deemed impermissible in law.

Furthermore, the court highlighted that the ITAT order was not accepted by the Hon'ble Gujarat High Court in General Motors India (P) Ltd. vs. Deputy Commissioner of Income Tax, leading to a settled legal position. The court referenced previous judgments, such as Pr. Commissioner of Income Tax, Central-2 vs. Supreme Petrochem Ltd., to support the argument that the ITAT order was not legally tenable. It was acknowledged that several revenue appeals had been withdrawn due to the established legal position.

Consequently, the court allowed the Petition, granting the prayer clause to issue a writ of certiorari under Article 226 of the Constitution of India. The impugned notice and order were quashed, canceled, and set aside based on the legal infirmities and impermissible change of opinion by the Assessing Officer.