Reopening of assessment due to change of opinion is not permissible in law: Bombay HC

Issue  

Writ Petition filed before the Bombay HC under Article 226 of the Constitution of India for examining the legality and validity of the impugned notice issued on March 23, 2011, notices dated June 08, 2011 and January 04, 2012 and the impugned order dated March 28, 2013 passed by the Respondents under Section 148 of the Income Tax Act, 1961. 

Brief Facts  

Revenue issued notice to the petitioner on 23rd march, 2011 informing that petitioner’s was chargeable to tax for Assessment Year 2004-2005 has escaped assessment within the meaning of Section 147 of the said Act. As with due notice the proposal to reassess has been done after the expiry of four years from the end of the relevant assessment year, viz., 2004-2005.  

Findings  

According to the provisions of Section 147 of the Act, income chargeable to tax has escaped assessment by reason of the failure on the part of petitioner to disclose fully and truly all material facts necessary for its assessment. As herein this case the reasons do not indicate which are those material facts that petitioner has failed to truly and fully disclose. 

As in case of Crompton Greaves Ltd. V/s. Assistant Commissioner of Income Tax, this court held that there must be cogent and clear indication in the reasons supplied, that in fact there was failure on the part of the assessee to disclose fully and truly all the material facts necessary for its assessment. If the factum of failure to disclose can be culled down from the reasons in support of the notice seeking to reopen assessment, that will certainly not be fatal to the assumption of jurisdiction under Sections 147 and 148 of the Act.   

Judgement  

Bombay HC held that the reasons recorded for reopening is nothing but a change of opinion which is not permissible in law. The notice dated 23rd March 2011 issued under Section 148 of the said Act has been issued after illegally assuming jurisdiction under Section 148 of the said Act. Therefore, the notice issued by the Revenue has been quashed. 

To Read the Judgement Download the PDF Given Below: