2025 (1) TMI 765 - HC - Income Tax

Reopening of assessment u/s 147 - reasons to believe - HELD THAT - As the impugned Notice u/s. 148 of the Act has been issued on the same set of facts, which was the basis of the Notice for re-opening issued in the year 2018, the impugned Notice is without jurisdiction and deserves to be quashed and set aside. Decided in favour of assessee.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions presented and considered in this judgment are:

Whether the Notice dated 30.03.2021 issued under Section 148 of the Income Tax Act, 1961, for the Assessment Year 2013-14 is valid and within jurisdiction.
Whether the re-assessment proceedings initiated on the same set of facts, which were the basis of an earlier re-assessment, are legally permissible.
Whether there was a failure on the part of the petitioner to disclose fully and truly all material facts necessary for assessment, justifying the reopening of the assessment.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity and Jurisdiction of the Notice under Section 148

Relevant Legal Framework and Precedents: Section 148 of the Income Tax Act allows for the issuance of a notice for reassessment if the Assessing Officer has reason to believe that income has escaped assessment. The validity of such a notice hinges on the existence of new information or material that justifies reopening the assessment.
Court's Interpretation and Reasoning: The court found that the impugned Notice dated 30.03.2021 was issued on the same set of facts as the previous notice from 2018. The court emphasized that reassessment on the same facts is not permissible unless there is new material or information.
Key Evidence and Findings: The affidavit-in-reply by the respondent admitted that the physical case record was not traceable, and the notice was issued to prevent the matter from becoming time-barred, rather than based on new information.
Application of Law to Facts: The court applied the legal requirement for new material to the facts and concluded that the absence of new information rendered the notice without jurisdiction.
Treatment of Competing Arguments: The petitioner's argument that the notice was based on incorrect factual details and lacked jurisdiction was not effectively countered by the respondent, who could not provide evidence of new material.
Conclusions: The court concluded that the notice was issued without jurisdiction and was therefore invalid.

Issue 2: Legality of Re-assessment on the Same Set of Facts

Relevant Legal Framework and Precedents: Legal principles dictate that reassessment cannot be initiated on the same facts unless there is a failure to disclose material facts by the assessee.
Court's Interpretation and Reasoning: The court reasoned that since the same facts were used for the earlier reassessment, and there was no new material, the subsequent notice was redundant and legally untenable.
Key Evidence and Findings: The respondent's admission that the notice was issued due to time constraints rather than new evidence was pivotal.
Application of Law to Facts: The court applied the legal standard requiring new material for reassessment and found it lacking in this case.
Treatment of Competing Arguments: The respondent's inability to demonstrate a failure by the petitioner to disclose material facts led to the court siding with the petitioner.
Conclusions: The court held that the reassessment on the same facts was not legally justified.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "The impugned Notice is without jurisdiction and deserves to be quashed and set aside."
Core Principles Established: Reassessment notices under Section 148 require new material or information that was not available during the original assessment or previous reassessment. Issuing a notice on the same facts without new evidence is not permissible.
Final Determinations on Each Issue: The court determined that the Notice dated 30.03.2021 was invalid due to lack of jurisdiction and absence of new material facts, leading to its quashing.

In conclusion, the court allowed the petition, quashing the Notice dated 30.03.2021 issued under Section 148 of the Income Tax Act, as it was based on the same facts as a previous notice without any new material, thus lacking jurisdiction. The ruling reinforces the principle that reassessment must be grounded in new information or material facts. No order as to costs was made.

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