Bombay High Court Quashes Reopening Income Tax Assessment After 4 Years Merely On The Change Of Opinion

The Bombay High Court has quashed the reopening of income tax assessments after 4 years merely on the change of opinion of the Assessing Officer (AO).

The bench of Justice K. R. Shriram and Justice Firdosh P. Pooniwalla observed that the Assessing Officer had in his possession all primary facts, and it was for him to draw a proper inference as to whether the brought forward unabsorbed depreciation should be adjusted against capital gains or profit and gains from business or profession. There was nothing more to disclose, and a person cannot be said to have omitted or failed to disclose something of which he had no knowledge.

The petitioner/assessee has filed a petition challenging the legality and validity of a reassessment notice issued by the department under Section 148 of the Income Tax Act, 1961. The reassessment notice was issued more than four years after the expiration of the relevant assessment year.

The assessee contended that unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, the notice issued for that assessment year would be without jurisdiction.

The department contended that the issue of unabsorbed depreciation and adjustment against capital gains or profit and gains of business and profession was not subject to the scrutiny assessment under Section 143(3). Therefore, the department was justified in proposing reopening the assessment.

The court held that it is nothing but a clear case of change of opinion, and the Assessing Officer has no jurisdiction to reopen the assessment.

"Even assuming for the sake of argument, the Assessing Officer should have taken into account that the brought forward unabsorbed depreciation for Assessment Years 2000-2001 and 2001-2002 amounting to Rs. 80,36,05,717/- should not have been adjusted against income from capital gains but instead against profit and gains of business or profession, still," the court said.

Case Title: Mukand Limited Versus The Union of India

Case No.: Writ Petition No.10859 Of 2012

Date: 17/07/2023

Counsel For Appellant: Jas Sanghavi

Counsel For Respondent: Akhileshwar Sharma

Click Here To Read The Order