A division bench of Gujarat High Court comprising Hon’ble Justice N.V. Anjaria and Devan M. Desai set aside the second notice issued for reopening the assessment of the Petitioner under section 147 of the Income Tax Act, 1966 (“the act”). The bench noted that as long as the first assessment was not completed, the question of issuing a second notice for the same purpose would not arise.
Brief Facts:
The Petitioner filed this application to set aside notice dated 30.03.2019 issued under Section 148 of the Income Tax Act, 1961 in respect of the assessment year 2012-13. By the said order, the assessing officer has sought to reopen the assessment of the Petitioner in respect of the year under consideration, stating inter alia that he had reasons to believe that the income of the assessee chargeable to tax for the assessment year 2012-13 escaped assessment within the meaning of section 147 of the act.
The Petitioner filed its return of income for the assessment year 2012-13 declaring total income at Rs.22, 93,460/-. The scrutiny assessment was completed under Section 143(3) of the Act. After that, the income tax authority issued a notice dated 19.03.2018 to the Petitioner under section 148 of the Act seeking to reopen the assessment. The notice was issued on the ground that the petitioner assessee had sold equity shares of Alpha Graphics to earn a long-term capital gain. Reassessment proposed in the first notice culminated in the passing of the assessment order.
While the notice dated 19.03.2018 aforementioned culminated as above, the notice impugned in this petition is the second notice in succession seeking to reopen the assessment of the Petitioner in respect of the same assessment year 2012-13. Therefore, this gives rise to the following question of law- whether it was permissible in law for the assessing officer to issue the second notice under Section 148 of the Act when once there was already a notice issued in the exercise of the same powers under the very provision in respect of the same assessment year 2012-13?
Observations of the Court:
This Court decided the above facts based on the decision of the Division Bench of this Court in Aditya Medisales Ltd. vs. Deputy Commissioner of Income Tax, Circle 1(1)[(2016) 232 Taxman 228]. The issue in the above case was whether the second reopening notice was valid ? In this regard, the division bench observed that as long as the assessment was at large by virtue of the first notice of reopening, the question of issuing a second notice for the same purpose would not arise.
In view of this Court, the observations in the decision in Aditya Medisales Ltd. (supra), reflect that the Court was not oblivious to the aspect that in a given case where a second notice for reopening was set aside, a piquant situation for the revenue may arise. The reasoning adopted by the Court was that “there cannot be two parallel assessments based on two notices. As long as the first assessment is not completed, the question of reassessment would not arise. Once a notice is issued under section 148 of the Act, it triggers the initiation of proceedings for assessment or reassessment of income which may have escaped assessment earlier. During such assessment, any income which may come to the notice of the Assessing Officer may also be brought to tax. Till this assessment is not completed, it would not be possible for him to form a belief that income chargeable to tax had escaped assessment”.
Therefore, an impugned notice dated 30.03.2019 under Section 148 of the Act, a notice for reopening the assessment for the same year under consideration was set aside.
The decision of the Court:
The Gujarat High Court, allowing the application, set aside the impugned notice dated 30.03.2019 under Section 148 of the Act, which is a notice for reopening the assessment for the same year under consideration.
Case Title: Bharatkumar Jayantibhai Patel vs Assistant Commissioner of Income Tax Circle
Coram: Hon’ble Justice N.V. Anjaria and Devan M. Desai
Case no.: R/SPECIAL CIVIL APPLICATION NO. 22135 of 2019
Advocate for the Applicant: Mr. Hardik V. Vora
Advocate for the Respondent: Mrs. Kalpanak Raval
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