In a recent decision the Bombay High Court quashed the re assessment order passed on change of opinion as to the calculation of tax payable.
By the petition under Article 226 of the Constitution, the petitioner, Chanchal Bhagwatilal Gokhru, sought to issue a writ of mandamus to quash and set aside the impugned notice under section 148 of the Income Tax Act, 1961 whereby the Income tax Officer proposed to reopen the assessment of the Petitioner for the Assessment Year (“AY”) 2014-15 on reason to believe that income chargeable to tax had escaped assessment and all subsequent proceedings to the impugned notice.
Evidently a notice under Section 148 of the Income Tax Act was issued after a period of four years following which a return of income was filed by the petitioner and this was followed by notice under Section 143(2) and notice under Section 142(1) of the Income Tax Act seeking details to which the petitioner filed a response and objected to the reassessment. The objections were disposed of and another notice was issued which led to filing of the petition.
Since the impugned notice under Section 148 of the Income Tax Act has been issued after the expiry of four years from the end of the relevant Assessment Year, the respondents have to show that the jurisdictional requirement is satisfied that there was failure to truly and fully disclose material facts as decided by the Bombay High Court in Ananta Landmark (P) Ltd. v DCIT.
The Coram comprising Justices Kamal Khata and Dhiraj Singh Thakur observed that “We find no substance in the AO’s reason to believe that income chargeable to tax has escaped assessment in as much as there is no mention of any tangible material that led to his conclusion. The entire process is triggered on a change of opinion as to the calculation of tax payable by the assessee.”
“It is evident that bald assertions of the transaction being “An accommodation entry made in collusion & connivance with the entry provider” are used to re-open the assessment. It is well settled judicial principal that, the true test of income chargeable to tax escaping assessment is whether there exists fresh “tangible material” on the basis of which appropriate conclusion is reached” the Bench concluded.
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