A division judge bench of Justice N.V. Anjaria and Bhargav D. Karia of Gujarat HC has held that reassessment under Section 148 of the Income Tax Act, 1961 could not have acted on the same material which was examined by him in the regular assessment.
Facts:
The petitioner maintains regular books of accounts which are subject to statutory and tax audit in a private limited company incorporated under the Companies Act, 1956. The petitioner filed its return on income for the assessment year 2013-14 on 29.9.2013 declaring total income of Rs.8,56,16,970/-. It is further stated that respondent initially issued notice under Section 142(1) of the Act on 21.7.2015 seeking several details and documents. The petitioner further stated that by reply cum communication dated 18.8.2015, the petitioner gave month wise details of opening stock, production- sales and closing stock relating to different accounts of material including the marble rubbles. The regular assessment was accordingly completed and total income of Rs.8,56,91,750/- was assessed.
Thereafter respondent issued the aforementioned notice under Section 148 of the Act for assessment year 2013-14 proposing reassessment of the total income of the petitioner. It is this notice which is brought under challenge in this petition. By letter dated 6.4.2018 the petitioner requested the respondent to supply the copy of reasons recorded by the Assessing Officer for reopening the assessment. Reasons were supplied to the petitioner on 14.8.2018. The petitioner e-mailed its objections on 1.9.2018 and the petitions were disposed of by order dated 28.9.2018. Therefore, the present petition under Article 226 of the Constitution was filed to set aside notice dated 23.9.2018 under Section 148 of the Income Tax Act, 1961 in respect of the assessment year 2013-14, seeking to reopen the assessment for the year under consideration.
Observations of the Court:
The court find out that it is clear that factual details on the basis of which the power to reasses was sought to be exercised was already furnished by the petitioner and considered by Assessing Officer in the course of regular assessment. The Assessing Officer was within the knowledge of such facts and details. Reassessment notice was acted upon basing the formation of reasons on very facts. It amounted to change of opinion on part of the Assessing Officer which is not permissible in law. This court emphased that there must be a ‘tangible material’ available with the Assessing Officer for to come to the conclusion that there was escapement of income as stated by the Apex Court in Commissioner of Income Tax Vs. Kelvinator of India Limited, [(2010) 320 ITR 561 (SC)].
In opinion of this court it was the case of clear change of opinion on part of the Assessing Officer in exercising powers to reopen the assessment but he misguided himself in law in seeking to reassess the income on the ground of mined and produced. It could not have acted on the same material which was examined by him in the regular assessment, in addition that the erring Officer erred in law too.
Decision:
The present appeal was allowed and Notice dated 29.3.2018 issued under Section 148 of the Income Tax Act, 1961 in respect of the assessment year 2013-14 is set aside, also set aside is the order Assessing Officer dated 28.9.2018 rejecting the objections.
Case: HINDUSTAN MARBLE PVT. LTD. Versus ASST. COMMISSIONER OF INCOME TAX CIRCLE 2(1)(1) OR HIS SUCCESSOR
Citation: R/SPECIAL CIVIL APPLICATION NO. 18767 of 2018
Coram: Justice N.V. Anjaria and Bhargav D. Karia
Dated: 21.10.2022
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