[Cites 14, Cited by 0]
Gujarat High Court
Pierlite India Private Limited vs Income Tax Officer, Ward 3(1)(1), ... on 10 March, 2026
Author: A.S. Supehia
Bench: A.S. Supehia
NEUTRAL CITATION
C/SCA/12690/2023 JUDGMENT DATED: 10/03/2026
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 12690 of 2023
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
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Approved for Reporting Yes No
✔
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PIERLITE INDIA PRIVATE LIMITED
Versus
INCOME TAX OFFICER, WARD 3(1)(1), AHMEDABAD
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Appearance:
MR TUSHAR HEMANI SENIOR ADVOCATE with MS VAIBHAVI K PARIKH(3238)
for the Petitioner(s) No. 1
AADITYA D BHATT(8580) for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 10/03/2026
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE PRANAV TRIVEDI)
1. Heard learned Senior Advocate Mr. Tushar Hemani assisted by
learned advocate Ms. Vaibhavi Parikh for the petitioner and learned Senior
Standing Counsel Mr. Aaditya Bhatt for the respondent.
2. Having regard to the controversy arising in this petition, which is in
a narrow compass, with the consent of the learned advocates for the
respective parties, the same is taken up for final hearing. Initially the
present petition was admitted on the ground of the jurisdiction of the
Assessing Officer and the Faceless Assessing Officer. However, this Court
vide order dated 17.09.2025 had concluded the issue and thereafter had
kept the present matter to be considered on merits separately. In wake of
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such factual aspect, the present petition is taken up for consideration on
merits
3. Present petition preferred under Article 226 of the Constitution of
India assails the validity of order dated 24.03.2023 passed under Section
148A(d) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"
for short) along with notice issued under Section 148 of the Act dated
24.03.2023 for the Assessment Year 2016-17 by the Income Tax Officer,
Ward-3(1)(1), Ahmedabad (hereinafter referred to as the "respondent" for
short).
4. The facts giving rise to the filing of the present writ petition are that
the petitioner is a Company incorporated under the provisions of
Companies Act, 1956 and is inter alia engaged in the business of
manufacturing low voltage switchgear and professional lighting solutions
for commercial, industrial, residential and floodlighting. The petitioner
filed its return of income for the year under consideration i.e. Assessment
Year 2016-17 in the month of November, 2016 declaring total income of
Rs. Nil. The tax liability of the petitioner was determined under the
provisions of Section 115JB of the Act.
4.1 The case of the petitioner for the year under consideration was
selected for scrutiny assessment. The concerned Assessing Officer
thereafter issued notice under Section 142(1) of the Act calling upon the
petitioner to furnish various details, information in relation to the
assessment proceedings. In consequence thereof, the petitioner furnished
all the necessary material as well as Tax Audit Reports and computation of
income for the year under consideration. However, the Assessing Officer
framed assessment under Section 143(3) of the Act vide order dated
27.12.2018 whereby the return filed by the petitioner was accepted.
4.2. The respondent authority by way of show cause notice dated
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C/SCA/12690/2023 JUDGMENT DATED: 10/03/2026
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09.03.2023 under clause (b) of Section 148A of the Act initiated
reassessment proceedings. It is the case of the petitioner that the show
cause notice dated 09.03.2023 issued under Section 148A(b) of the Act was
not served upon the petitioner either through E-mail or post or courier and
despite such fact, the respondent authority vide order dated 24.03.2023
passed an order under Section 148A(d) of the Act and concluded that there
was escapement of income to the tune of Rs.4,21,22,151/- and thereafter
proceeded to issue notice under Section 148 of the Act which are
impugned in the present petition.
5. Learned Senior Advocate Mr. Tushar Hemani assisted by learned
advocate Ms. Vaibhavi Parikh for the petitioner has submitted that the
respondent has acted illegally and without jurisdiction while issuing notice
under Section 148 of the Act. It is submitted that the notice under Section
148 of the Act is issued only if there is escapement of income chargeable to
tax. However, it is well settled that such conclusion must be based upon
reasonable ground and not on mere change of opinion. It is further
submitted that there must be live link or nexus between the material
before the Assessing Officer and the belief formed regarding escapement
of income and such belief must necessarily lead to a conclusion that some
income chargeable to tax has escaped assessment.
5.1. It is further submitted that the case of the petitioner was selected
for scrutiny and the same was threadbare examined at the original
assessment stage by the Assessing Officer as is evident from the reply
dated 05.12.2018, show-cause notice dated 10.12.2018 and the
Assessment Order dated 27.12.2018. It is therefore submitted that the
reopening is merely based on the change of opinion and the same is not
permissible in the eye of law.
5.2. It is lastly contended by learned Senior Advocate Mr. Hemani that it
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is well settled that the Assessing Officer cannot take any action under
Section 147 of the Act, merely on account of change of opinion or to hold
an opinion different from that of his predecessor on the same set of facts.
It is, thus, submitted that having formed an opinion at the original
assessment stage, it is now not open to change the opinion and take a
different stand based on the very same set of facts and information. Hence,
it is urged that the reassessment is invalid and unwarranted. Even
otherwise, this Court has time and again taken a view that mere change of
opinion is not sufficient to reopen the completed assessment.
6. Per contra, learned Senior Standing Counsel Mr. Aaditya Bhatt for
the respondent has submitted that the case of petitioner was reopened by
issuing notice under Section. 148 of the Act on 24.03.2023, as per new
provision of Sections 148 and 148A of the Act amended vide Finance Act
2021 and the information which suggest that income chargeable to tax
which has escaped assessment has been provided to the petitioner on
09.03.202 by issuing show cause notice under Section 148A(b) of the Act.
It is further submitted that in response, the petitioner has neither filed any
submission nor sought adjournment. Therefore, in absence of any reply, an
order under Section148A(d) of the Act was passed 24.03.2023 after
obtaining prior approval of competent authorities. Accordingly, notice
under Section 148 of the Act was issued on 24.03.2023 along with order
under Section 148A(d) of the Act of the same date. It is thus, submitted
that the case of the petitioner was reopened after following the provisions
of the Act and as such, the notice under Section 148 of the Act is valid and
legal.
6.1. It was further submitted by learned Senior Standing Counsel Mr.
Bhatt that in absence of reply from the petitioner, it is established that the
petitioner failed to explain the fact that the income arising from the
impugned transaction has been duly disclosed and relevant income arising
thereof has been offered for taxation for the relevant assessment year.
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Therefore, the documents or evidence available on record suggests that
the income chargeable to tax in the case of the petitioner, in respect of the
above-mentioned unexplained transaction of Rs.4,21,22,151/-, which is
being represented in the form of assets (as defined in the Explanation to
Section 149 of the Act) has escaped assessment for the Assessment Year
2016-17. Hence, notice under Section 148 of the Act was issued on
24.03.2023 along with order under Section 148A(d) of the Act.
6.2. In view of the facts as narrated above, learned Senior Standing
Counsel Mr. Bhatt has submitted that at the time of original assessment
proceedings, the aforesaid information was not available on the records
and therefore, it cannot be a case of change of opinion as there was no
opinion formed in the first instance. The Assessing Officer through the
application of mind on the information, formed an opinion and satisfied
that the information available on record suggests that the income
chargeable to tax in the case of the petitioner has escaped assessment.
Thus, there is no question of change of opinion since an opinion was never
formed at the first instance. In view of such submissions, learned Senior
Standing Counsel Mr. Bhatt has prayed to dismiss the present writ
petition.
7. Having heard the learned counsel appearing for the respective
parties and having perused the material on record, it would be proper to
go through the reply filed by the petitioner in the original assessment
proceedings which are appended at page 36 to 46 of the writ petition. A
specific contention is raised by the petitioner which is appended at page 44
wherein it was categorically replied that :
"Point 6 of the show cause notice :
With respect to loans of Rs.4,21,22,151/- you are required to furnish
tax audit report and computation of income of A.Y. 2014-15.
Our response.
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We would like to take your attention to point no. 2 of our submission
letter dated 5 December, 2018, where we have provided the details
pertaining the advances of INR 4,21,22,151/- to B.P. Projects Limited
and the details of the litigation going on under 138 of the Negotiable
Instruments Act, and the reasons for write-off of loans and advances.
Further, we have attached herewith TAR as Annexure-15 (Page no.
165-209) along with computation of income as Annexure-27 (Page No.
492-495) and financial statements for AY 2014-15 as Annexure-28
(Page No. 496-514), respectively."
8. On going through the same, it is not in dispute that the reasons
recorded in the order issued under Section 148A(d) of the Act was already
considered by the Assessing Officer in the Assessment Order dated
24.03.2023. The Assessing Officer does not have the power to review his
own assessment arrived at during the original assessment. The petitioner
had provided all the information which was considered by the respondent.
It is settled law that the proceedings under Section 148 of the Act cannot
be initiated to review the earlier stand adopted by the Assessing Officer.
The Assessing Officer cannot initiate reassessment proceedings to have
relook with the documents filed in the original assessment proceedings.
The power to reexamine cannot be exercised from time to time. This issue
has been categorically settled by the Hon'ble Apex Court in case of
Commissioner of Income Tax, Delhi v. Kelvinator of India Limited reported
in (2010) 320 ITR 561 (SC), wherein the Hon'ble Court has held as under:
"2. A short question which arises for determination in this batch of civil
appeals is, whether the concept of "change of opinion" stands obliterated
with effect from 1st April, 1989, i.e., after substitution of Section 147 of
the Income Tax Act, 1961 by Direct Tax Laws (Amendment) Act, 1987?
.... .... ..... .....
4. ............prior to Direct Tax Laws (Amendment) Act, 1987, re-opening
could be done under above two conditions and fulfillment of the said
conditions alone conferred jurisdiction on the Assessing Officer to make a
back assessment, but in section 147 of the Act [with effect from 1st April,
1989], they are given a go-by and only one condition has remained, viz.,
that where the Assessing Officer has reason to believe that income has
escaped assessment, confers jurisdiction to reopen the assessment.
Therefore, post1st April, 1989, power to re-open is much wider, However,
one needs to give a schematic interpretation to the words "reason to
believe" failing which, we are afraid, Section 147 would give arbitrary
powers to the Assessing Officer to re-open assessments on the basis of
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"mere change of opinion", which cannot be per se reason to reopen. We
must also keep in mind the conceptual difference between power to review
and power to re-assess. The Assessing Officer has no power to review; he
has the power to re-assess. But re-assessment has to be based on
fulfillment of certain pre-condition and if the concept of "change of
opinion" is removed, as contended on behalf of the Department, then, in
the garb of re-opening the assessment, review would take place. One must
treat the concept of "change of opinion" as an in-built test to check abuse
of power by the Assessing Officer....."
9. In view of the above, the present writ petition is required to be
allowed and the same is hereby allowed. The impugned order dated
24.03.2023 passed under Section 148A(d) of the Act and the notice of same
date issued under Section 148 of the Act are hereby quashed and set aside.
Rule is made absolute to the aforesaid extent. No order as to cost.
(A. S. SUPEHIA, J)
(PRANAV TRIVEDI,J)
phalguni/21(Board-III)
