Reconsidering Decision rendered in Earlier Regular Assessment amount to “Change of Opinion”: Bombay HC Quashes Re-Assessment [Read Order]

In a significant case the Bombay High Court bench of Justice Dhiraj Singh Thakur and Valmiki Sa Menezes, Observed that reconsidering decisions rendered in earlier regular assessment amounts to change of opinion. Thus the bench quashed the re-assessment proceedings initiated against Pushpa Nahata.

Petitioner/ Assessee, Pushpa Nahata engaged in the business of the fabrics and after filing the return of income for the assessment year 2014-15 which was processed under section 143(3) of the Income Tax Act 1961 by the Assessing Officer. Thereafter the assessing officer (AO) found that assesee purchased 2000 shares in a non-listed company, NCL Research and Financial Limited for a consideration of Rs.3,58,343, within a period of two years, had sold the same for a consideration of Rs.30,86,000/-The AO further conclude that the investment made by the petitioner in NCL Research and Financial Limited found to be bogus and AO made addition of amount .

Thus AO issued a notice under section 148 Income Tax Act 1961 seeking to reopen the assessment for the said assessment year 2014-15 on the ground that income chargeable to tax had escaped assessment within the meaning of section 147 of the Income Tax Act 1961.Against the order petitioner filed a writ petition before the High Court.

Satish Mody with Ms. Aasifa Khan Counsels for the petitioner submits that, the reopening of the assessment procedure was void –abnitio.

Further counsel determine that By virtue of order of assessment, passes under section 147 of the Income Tax Act 1961 the AO added to the income of the assessee an amount of Rs.3, 58,343/- under the head ‘income from other sources’ under section 68 of the Income Tax Act 1961 representing the difference between the alleged sale consideration of Rs.38,86,000/- and Rs.27,15,475/

Akhileshwar Sharma, counsel for the respondent, confirmed the order of the AO and supported the action of reopening the assessment.

After considering the content of the both parties the division bench allowed the writ petition filed by the petitioner and observed that AO, in the reassessment proceedings, has not stated as to what was that material which had not been disclosed by the petitioner during the regular assessment proceedings.

Further the bench consider that the “AO has only tried to re-visit and reconsider the decision rendered in the earlier regular assessment proceedings on the ground that the addition ought not to have been limited only to Rs.27,27,657/- and ought to have been extended to Rs.3,60,135/-. This, in our opinion, was nothing but a change of opinion on the part of the AO, and therefore, impermissible in law.

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