The Rajasthan High Court has held that the re-assessment passed after 4 years merely based on a change of opinion without any tangible material would be time-barred under the provisions of section 148 of the Income Tax Act, 1961.
The petitioner, Mr. Rampal Samdani did not furnish his return of income for the Assessment Year 2013-14 for the reason that he was having income lower than the basic exemption limit prescribed under the Income Tax Act and Rules. A notice was issued by the ITO proposing to initiate assessment proceedings under Section 147 of the Income Tax Act alleging that the Long Term Capital gain tax and total income of the petitioner for the Assessment Year 2013-14 was computed as Rs.1,04,591/- and an order under Section 156 of the Income Tax Act was issued on 26.04.2017 indicating that the petitioner was required to pay ‘NIL’ amount towards income tax.
Justice Sandeep Mehta and Justice Kuldeep Mathur observed that “a clear perusal of the proviso to Section 147 of the Income Tax Act makes it clear that reassessment proceedings after expiry of four years from the end of the relevant assessment year can only be initiated in case, there is tangible material with the A.O. to show that the assessee had failed to fully and truly disclose all material facts necessary for his assessment for that assessment year. This Court, after analysis of material facts available on record, is of a categoric opinion that the assessee disclosed all material facts truly and fully while furnishing the return for the Assessment Year 2013-14 and hence, there was no justification for invoking the proviso to Section 147 of the Income Tax Act so as to initiate reassessment proceedings after a period of 4 years. Thus, the reassessment notice is definitely time barred. In addition thereto, the reassessment notice has been issued only on account of ‘change of opinion’, plain and simple, without any tangible fresh material being available to the ITO for reopening the assessment proceedings.”
Concluding the order, the High Court added that “In addition thereto, the reassessment is being resorted to only on account of ‘change of opinion’ of the Assessment Officer without there being any fresh tangible evidence for reopening the assessment proceedings. Hence also, the impugned notice dated 30.03.2021 under Section 148 of the Income Tax Act runs foul of the Supreme Court Judgment in the case of Commissioner of Income Tax vs. Kelvinator of India Limited (Supra) and thus, the same cannot be sustained and is liable to be struck down.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
