2024 (9) TMI 215 - HC - Income Tax

Reopening of assessment - reasons to believe - unsecured loans receipts - HELD THAT - It is not in dispute that the AO while passing the Assessment Order u/s 143 (3) of the Act has specifically called for the information of the unsecured loans. The assessee has furnished the requisite details pertaining to the unsecured loans. On perusal of the Assessment Order, more particularly ground of addition of bogus unsecured loans.' Merely because there is a difference between the amount of unsecured loans in the books of the account of the petitioner and the addition made by the AO in the original assessment, it cannot be said that the income has escaped assessment as the AO while framing the assessment has considered the entire issue during the course of the assessment. The reliance placed on the decision in case of Income Tax Officer versus Techspan India Private Limited and Another 2018 (4) TMI 1376 - SUPREME COURT is also not applicable in the facts of the case as the issue of unsecured loans was considered by the AO during the course of regular assessment proceedings, more over, on perusal of the reasons recorded, it is clear that the contention raised by the learned advocate for the respondent is not found to be mentioned in the reasons recorded because as per the reasons recorded, entire amount of Rs. 11,87,79,500/- is presumed to be the income which has escaped the assessment. It is clear that there is a mere change of opinion on part of the respondent while issuing the impugned notice under Section 148 of the Act. Respondent could not have assumed the jurisdiction to issue the impugned notice under Section 148 of the Act. It is also pertinent to note that the addition made during the regular course of assessment was challenged before the Commissioner (Appeals) by the petitioner who has allowed the appeal of the assessee and therefore, the issue of unsecured loans based upon which the impugned notice is issued has already merged into the order of the appellate authority. Assessee appeal allowed.

Issues Involved:
1. Legality of the notice issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2016-17.
2. Whether the reassessment proceedings were based on a mere change of opinion.
3. Jurisdiction of the Assessing Officer to issue the impugned notice.
4. Impact of the appellate order on the reassessment proceedings.

Detailed Analysis:

1. Legality of the Notice Issued under Section 148 of the Income Tax Act, 1961:

The petitioner challenged the notice dated 28.03.2021 issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2016-17. The reasons recorded by the Assessing Officer for reopening the assessment included the acceptance of unsecured loans during the year, which were not adequately substantiated by the petitioner. The Assessing Officer believed that income amounting to Rs. 11,87,79,500/- had escaped assessment.

2. Whether the Reassessment Proceedings were Based on a Mere Change of Opinion:

The petitioner contended that during the original assessment proceedings under Section 143(3) of the Act, full disclosure of all material facts, including unsecured loans, was made. The impugned notice under Section 148 was issued to re-verify and re-examine matters already considered in the original assessment. The petitioner argued that the reasons recorded by the Assessing Officer were based on material already available on record, thus constituting a mere change of opinion.

3. Jurisdiction of the Assessing Officer to Issue the Impugned Notice:

The respondent-Assessing Officer rejected the petitioner's objections, stating that there was a difference between the total unsecured loans in the petitioner's books and the addition made in the original assessment, amounting to Rs. 30,79,500/-. The Assessing Officer claimed that no opinion was formed on this differential amount during the original assessment as the petitioner did not furnish details about one of the parties, Kushal Export, from whom a loan of Rs. 30 Lakhs was obtained.

The court noted that during the original assessment, the Assessing Officer had specifically called for information regarding unsecured loans, and the petitioner had furnished the requisite details. The court found that the issue of unsecured loans was thoroughly scrutinized during the original assessment proceedings.

4. Impact of the Appellate Order on the Reassessment Proceedings:

The court observed that the addition made during the regular assessment was challenged before the Commissioner (Appeals), who allowed the appeal and deleted the entire addition. Therefore, the issue of unsecured loans had already merged into the appellate authority's order.

Conclusion:

The court concluded that the reassessment proceedings were based on a mere change of opinion, as the issue of unsecured loans was already considered during the original assessment. The court held that the respondent could not assume jurisdiction to issue the impugned notice under Section 148 of the Act. Consequently, the petition was allowed, and the impugned notice was quashed and set aside. The rule was made absolute to the aforesaid extent, with no orders as to costs.

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