The division bench of Bombay High Court presided by Mr. K.R. Shriram and Mr. N.R. Borkar has held that reopening of assessment cannot be done merely on change of opinion.
The petitioner, Vapi Infrastructure and Industrial Township LLP is engaged in the business of real estate and real estate development. The return of income for A.Y. 2014-2015 was filed by Petitioner as ‘Nil’. The return was selected for scrutiny under Section 143(2) of the Income-Tax Act. Assessment was completed after considering responses of parties to notices issued under Section 133(6) of the Act and all documents and explanations submitted by Petitioner.
After 5 years the petitioner received notice from respondent alleging that petitioner’s income chargeable to tax for A.Y. 2014-2015 has escaped assessment. The allegation was based on the loan secured by the petitioner from creditors whose income was very low during the year. The respondent alleged that the assessee provided no explanation about the nature and the source of the loan, the credit worthiness of the creditor and genuineness of the transaction.
The counsel Mr. Rahul Hakani, for the appellant submitted that notice under Section 133(6) of the Act has also been issued to third party lenders who have given confirmation about the transaction and credit worthiness.
The High Court observed that the respondents counsel Mr. Akhileshwar Sharma, submitted that in the Assessment Order the issue has not been discussed. That does not help the cause of Respondents because it is settled law that once query has been raised and answers have been given, even if the assessment order is silent, the Assessing Officer is supposed to have considered the issue and is deemed to have been satisfied with the explanation offered by the assessee.
The Coram of has held that “we are satisfied that re-opening proposed is purely based on change of opinion and the entire issue which is the subject matter of the reasons recorded has been raised during the assessment proceedings, response obtained from Petitioner and Petitioner’s explanation has been accepted by the Assessing Officer”. And further held that “we will have to note that notice issued under Section 148 of the Act dated 31st March, 2021 impugned in this Petition has to be set aside”.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.
