The Bombay High Court observed that mere change of opinion does not provide jurisdiction to Assessing Officer (AO) to initiate proceeding under Section 147 of the Income Tax Act, 1961.
The main ground of challenge to the initiation of the reassessment proceedings is that there was no omission on the part of the Petitioner assessee, Konark Life Spaces, to disclose fully and truly any material fact and that all material facts had been disclosed before the AO in regard to the said amount, which was considered by the AO leading to the passing of the order of assessment.
It was stated that during the course of the said scrutiny assessment, the AO had vide the notice issued under Section 142(1) of the Act, sought details with regard to the loans/advances made to a sister concern(s)(Form 3CD). In this regard, it is stated that the said notice was replied vide communication.
Finally, the order of assessment came to be passed. The main ground of challenge in the present petition is that the initiation of reassessment proceedings is nothing but a change of opinion and there was no omission on the part of the Petitioner to make disclosure of the material facts in the present case.
In the present case the assessment is sought to be reopened beyond the period of four years from the end of the relevant assessment year 2015-16 and, therefore, the jurisdictional requirement that there was a failure on the part of the assessee to fully and truly disclose all material facts necessary for assessment had to be established by the assessing officer.
If a notice under Section 148 has been issued without the jurisdictional foundation under Section 147 being available to the Assessing Officer, the notice and the subsequent proceedings will be without jurisdiction, liable to be struck down in exercise of writ jurisdiction of the court.
In the present case, it is not justifiable as to what information was received by the assessing officer and what was that issue or material that had not been considered by the assessing officer. It is an absence of an agreement between the Petitioner and M/s Nancy Builders and Developers Ltd that the assessing officer formed a basis for reopening the assessment.
The Coram consisting of Justices Kamal Khata and Dhiraj Singh Thakur, relied on the judgment in Jindal Photo Films Ltd v. Deputy Commissioner of Income Tax, wherein it was held that “Mere change of opinion which does not provide jurisdiction to the Assessing Officer to initiate proceedings under Section 147 of the Act.”
Upholding the precedent, the Court observed that “There cannot be any failure to disclose fully and truly, if there was no such document as such. This, in our opinion, is nothing but a change of opinion, which does not satisfy the jurisdictional foundation under Section 147 of the Act.”
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