2024 (7) TMI 446 - HC - Income Tax

Reopening of assessment u/s 147 - notice beyond the period of 4 years - Issue of shares at premium - reopening of assessment can be said to be change of opinion? - HELD THAT - As made abundantly clear therein that the issue with regard to rise in share premium was discussed during the course of assessment proceedings and the said issue was well within the mind of then AO at the time of scrutiny assessment. At the time when the original scrutiny assessment was concluded, then Assessing Officer had already considered the issue of rise in share premium and thereafter the assessment was framed, therefore, it would not be now permissible in eye of law that revenue can reopen the concluded assessment proceedings on the same issue and details. It cannot be said that any new or tangible material has come in possession of the revenue which was not truly and fully disclosed by the assessee at the time when the assessment proceedings were concluded. Accordingly, in our view, notice u/s 148 of the Act seeking reopening of the concluded assessment is nothing but mere change of opinion. Decided in favour of assessee.

Summary

Issues:
Challenge to Notice under Section 148 of the Income-Tax Act, 1961 for reopening assessment for the Assessment Year 2015-16.

Analysis:
1. The petitioner, engaged in e-commerce and IT services, issued shares at a premium, leading to a significant increase in security premium. The case was selected for scrutiny, and the petitioner provided all required details in response to the notice dated 20.3.2017.
2. Subsequently, a notice under Section 148 was issued on 31.3.2021 to reopen the assessment for the same year. The petitioner requested reasons for reopening, which were provided on 19.5.2021. The objections raised by the petitioner were disposed of on 1.3.2022, upholding the reopening.
3. The petitioner contended that the reopening was beyond the 4-year period and lacked true and full disclosure, citing various documents. They argued that the notice should be quashed due to failure to meet the conditions for reopening.
4. The petitioner also claimed that the reopening was based on a change of opinion, as the original assessment thoroughly examined the case. They argued against the permissibility of changing the opinion based on the same facts and evidence.
5. Additionally, the petitioner argued against reopening for fishing inquiries without specific findings of income escapement and on the grounds of borrowed satisfaction, stating that relying solely on external sources was impermissible.
6. On the other hand, the revenue contended that the notice was justified, as there was a substantial increase in share premium raising questions about genuineness. They argued that the notice was issued within the legal framework and based on a prima facie opinion with sufficient material.
7. The Court analyzed the reasons for reopening, noting the substantial increase in share premium and the need for verification. They also reviewed a verification report indicating that the issue of share premium was discussed during the original assessment, concluding that the reopening was a mere change of opinion.
8. Consequently, the Court allowed the petition, quashing the notice under Section 148 seeking to reopen the assessment for the Assessment Year 2015-16.