In a recent decision the Madras High Court observed that no reopening of Assessment under Income Tax Act, 1961 can be made when the reasons cited was inspired from change of opinion of the Assessing Officer ( AO ).
The specific case of the petitioner is that invocation of Section 148 of the Income Tax Act which is subject matter of challenge in was without jurisdiction as the petitioner had filed all the documents that were required for assessment before the assessment order and therefore invocation of Section 148 for the purpose of re-assessment to Section 147 of the Income Tax Act as it stood prior to its amendment with effect from 01.04.2021 during the period in dispute was not available to the Income Tax Department.
It was further submitted that the invocation of power under Section 148 of the Income Tax Act was without merits as the reason that was given for re-opening of the assessment in the notice issued under Section 143(2) read with Section 147 of the Income Tax Act, clearly states that the reason for re-opening the assessment was “on perusal of the profit and loss account, wherein it was found that the petitioner had claimed a sum of Rs.3,80,170,011/- towards net gain on account of foreign exchange fluctuations under other income and that this amount includes unrealized foreign exchange loss to the tune of Rs.1,43,82,361/-”.
The Standing Counsel for the respondents submitted that the petitioner has not made a true and full disclosure of all the material that is required for completing the assessment and therefore, the Department was justified in re-opening the assessable vide impugned notice dated 25.03.2021 and consequently the order dated 01.03.2022 was passed over ruling the objection of the petitioner.
A Single Bench of Justice observed that “The reasons given for re-opening of the Assessment along with a notice issued under Section 143(2) read with Section 147 of the Income Tax Act, 1961 on 05.05.2021 is also based on the Profit and Loss Account. Thus, there is no scope for re-opening of the assessment which was completed on 28.09.2018 under Section 143(3) read with section 92CA(3) and Section 144C(8) of the Income Tax Act. Clearly, the reasons given for re-opening of the assessment is inspired from change of opinion.”
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