In a significant case the Bombay High Court quashed income tax proceedings against Mumbai Postal Employees and observed that re-assessment initiated based on the change of the opinion.
Petitioner Mumbai Postal Employees Co-operative Credit Society Ltd is a co-operative credit society .The membership being limited only to the employees of Indian Postal Service Government of India employed in the State of Maharashtra and Goa. The object of the society is stated to encourage savings habits amongst its members and to undertake activities for improving welfare of the members. It is stated that out of the fund collected from members, loans are provided to its members without any security, at a rate of interest lower than the rates charged by the banks.
After filing the return of the income petitioner case was selected for scrutiny. One of the issues flagged during scrutiny was the deduction claimed under Chapter VI-A of the Act by the Petitioner.Therafter the reply filed by the petitioner to the issue raised during scrutiny proceedings assessing officer issue notice to reopen the assessment proceedings for the assessment year 2014-15 on the ground that the income had escaped assessment for the said year. Against the order petitioner filed a writ petition before the court.
Mistri, Madhur Agrawal , Atul K. Jasani Advocates ,appeared for the petitioner, and Suresh Kumar ,advocate appeared for the respondents.
Counsel for the petitioner submits that, “there was no tangible material with the assessing officer for initiating the reassessment proceedings and that it was nothing but a classic case of change of opinion”
Counsel for the respondent submits that there was no jurisdictional error committed by the assessing officer in initiating and concluding the reassessment proceedings against the Petitioner.
After considering the contentions of the both side the division bench of Justice Dhiraj Singh Thakur and Kamal Khata allowed the writ petition filed by the petitioner and observed that the jurisdictional requirement of the proviso to Section 147 of the Income Tax Act 1961 had not been complied with as the assessing officer in these case.
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