Bombay HC quashes Re-Assessment Notice citing jurisdictional errors by AO [Read Order]

The Bombay High Court quashed re assessment notice citing jurisdictional errors by Assessing Officer (AO).

The Petitioner, Tahnee Heights CHS Ltd, is a housing society registered under the Maharashtra Cooperative Societies Act and filed its return for the assessment year 2013-14 after claiming deduction under Section 80P of the Income Tax Act.

The return of income was selected for scrutiny and a notice under Section 143(2) of the Income Tax Act was issued. Subsequently, a notice under Section 142(1) of the Income Tax Act was issued calling for various details from the Petitioner including computation of income, annual accounts, bank statements, details of various deductions etc.

A reply to the said notice was submitted by the Petitioner and finally the deduction came to be allowed in the order of assessment under Section 143(3) of the Income Tax Act and the A.O. in the order of assessment made certain disallowances, it allowed the deduction under Section 80P in the order of assessment. Subsequently, a notice under Section 148 of the Income Tax Act was issued.

Objections to the reopening were filed by the Petitioner highlighting the fact that there was no failure on the part of the assessee to disclose fully and truly all material facts before the Assessing Officer (A.O.) during the assessment proceedings under Section 143(3) of the Income Tax Act.

It was also stated by the Petitioner that there was no new tangible material with the A.O. based upon which the assessment could be reopened and that a reappraisal of existing material would amount to review and change of opinion, which was impermissible in view of the various pronouncements on this subject.

The Bench comprising Justice Kamal Khata and Justice Dhiraj Singh Thakur observed that “Even in the present case there appears to be no tangible material with the A.O. as can be seen from the reasons recorded and that the reference was made only to the records of the assessment. It thus appears that between the date of the order of assessment and the date of the issuance of notice, nothing new had happened.”

The Court also noted that if a query is raised during the assessment proceedings and the assessee submits a reply thereto, leading to the passing of the order of assessment, a reopening in the absence of any new tangible material would be nothing but a change of opinion, which would not furnish to the A.O. a basis for his ‘reasons to believe’ that income chargeable to tax had escaped assessment.

“Be that as it may, we are of the opinion that the impugned notice is unsustainable on account of these jurisdictional errors committed by the A.O” the Court concluded.

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