Bombay High Court Quashes Re-Assessment Order Based On Change Of Opinion Without Any Tangible New Information

The Bombay High Court has quashed the reassessment order based on a change of opinion without surfacing any tangible new information.

The bench of Justice K. R. Shriram and Justice N. K. Gokhale has observed that the petitioner has fully and truly disclosed all material facts necessary for the purpose of assessment. The AO issued the first assessment order after carefully scrutinising the material furnished by the petitioner. The respondent department has failed to furnish any reasons for reopening as mandated by law. There is not even a whisper in the entire communication trail as to what was not disclosed.

The petitioner/assessee assailed a notice issued by the Deputy Commissioner of Income Tax under Section 148 of the Income Tax Act 1961 seeking to reopen the assessment for the assessment year 2015-16, order dated March 24, 2022. The petitioner sought an order restraining the respondents from taking any action pursuant to the assailed orders.

The petitioner contended that there was no failure on the part of the petitioner to disclose truly and fully material facts. The reassessment is purely on the basis of a change of opinion. There is no new tangible material. Even on merits, there is no income that has escaped assessment. The notice under Section 148 was issued after the expiration of four years, so the first proviso to Section 147 shall apply.

The department contended that the petitioner had not made a full and true disclosure. Hence, the AO is well within his rights to reopen the subject assessment.

The court held that it is settled law that the reasons for reopening an assessment can be tested and examined only on the basis of the reasons recorded at the time of issuing the notice under Section 148. The department has not even placed on record any document to suggest that the reasons recorded have been furnished to the petitioner. On this ground alone, the assessment order impugned herein deserves to be quashed.

Case Title: Ashraf Chitalwala Versus DCIT

Case No.: Writ Petition No.2350 Of 2022

Date: 05/09/2023

Counsel For Petitioner: Dharan Gandhi

Counsel For Respondent: Swapna Gokhale

Click Here To Read The Order