A Division Bench of the Gujarat High Court held that a change of opinion on the basis of existing records is not a valid ground for reopening the assessment of Hindustan Marble Pvt. Ltd., the assessee-applicant.
The Bench of Justice N V Anjaria and Justice Bhargav D Karia observed that “the words ‘reason to believe’ do not give arbitrary powers to the Assessing Officer to reopen the assessment”.
It was emphasized by the assessee that mere change of opinion could not be a ground to invoke the powers of reassessment. It was further submitted in that regard that the facts on the basis of which reassessment was sought for was already solicited and examined by the Assessing Officer in course of the regular assessment.
It was also submitted that the details relating to rubble payments in respect of the marble rubble etc. were made available to the Assessing Officer pursuant to such details having been called for in the notice under Section 142(1) of the Income Tax Act, 1961.
On further submissions, it was argued that the condition to be satisfied is that the information and documents available on record must show nexus to the opinion and the factum of escapement of the income and it was contended that the words ‘reason to believe’ do not give arbitrary powers to the Assessing Officer to reopen the assessment.
It was observed by the court that the respondent Assessing Officer had fully examined the rubble aspect and the royalty removal, regarding which the facts and details were clearly furnished by Hindustan Marble Private Limited.
The Court held that the reassessment notice was acted upon based on a ‘change of opinion’ on part of the Assessing Officer which is not permissible in law. It was also held that he misguided himself in law in seeking to reassess the income on the ground of ‘mined and produced’ based on material already furnished by the applicant-assessee.
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