The Orissa High Court while quashing the show cause notice ruled that the reopening of Income Tax Assessment for mere change of opinion is invalid.
The Petitioner, Rama Devi Sabat is a proprietorship concern, dealing with retail sales of IMFL, mobile phone recharge vouchers business in the name of M/s. Sandeep Enterprises and execution of works contract in the name of R.D. Constructions. The Petitioner filed her return under Section 139 of the IT Act on 30th September, 2009 disclosing total income of Rs.15,30,040/-. The return was picked up as scrutiny and notices were issued under Section 143 (1) and 142 of the Income Tax Act by the Assessing Officer (AO). The AO passed the assessment order on 22nd November, 2011 under Section 143 (3) of the IT Act computing the taxable income at Rs.19,68,310/-. The AO estimated the income from the IMFL business at Rs.15,95,138/-, for M/s. Sandeep Enterprises in the sum of Rs. 2 lakh and R.D. Constructions in the sum of Rs.2,59,000/-.
The impugned notice was issued to the Petitioner Assessee under Section 148 of the Income Tax Act stating that he had reason to believe that the income chargeable to tax for AY 2009-10 has escaped assessment. In response to the said notice, the Petitioner sought the reasons for reopening.
The petitioner contended that the initiation of the reassessment proceedings was based merely on a change of opinion, the present petition has been filed.
The division bench headed by the Chief Justice Dr. S. Muralidhar and Justice A. K. Mohapatra ruled that the AO had applied his mind to the documents and records produced before him by the Assessee. This included the balance sheet, P & L Accounts and other relevant documents. It is plain, therefore, that the reopening of the assessment was not based on any new material.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.
