Reopening cannot be proposed on the basis of change of opinion

Lokhandwala Construction Industries Private Limited Vs DCIT (Bombay High Court)

Once a query is raised during assessment proceedings and assessee has replied to it, it follows that the query raised was a subject matter of consideration of the Assessing Officer while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. In this case, during the original assessment proceedings, a notice dated 19^th October 2019 was issued under Section 142(1) of the Act by which petitioner was called upon to furnish copies of Index II(s) of three flats sold during the year. Petitioner responded by its letter dated 14^th November 2019 and provided copies of Index II of flats sold during the year. Therefore, it is abundantly clear that the second issue relating to nine flats out of the twelve flats mentioned in the reasons for reopening was a subject of consideration of the Assessing Officer while completing the assessment. There can be no doubt in the present facts that the subject matter of the market value of nine flats as against the agreement value was a subject matter of consideration by the Assessing Officer. It would, therefore, follow that the reopening of the assessment for this reason is merely on the basis of change of opinion of the Assessing Officer. As held in Aaroni Commercials Ltd. (supra) this change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment.

FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT

1 Petitioner is impugning the notice dated 30^th March 2021 issued under Section 148 of the Income Tax Act, 1961 (the said Act) for A.Y. 2017-18 and the order dated 10^th December 2021 rejecting petitioner’s objections. The subsequent notices issued have also been included in the petition.

2 Admittedly, the re-opening has been proposed before the expiry of four years from the end of relevant assessment year, and therefore, even proviso to Section 147 will not apply. At the same time, it is settled that if an assessment has been completed under Section 143(3), re-opening cannot be proposed on the basis of change of opinion. In this case assessment under Section 143(3) has been completed. Let us now examine whether the notice is sustainable.

Please become a Premium member. If you are already a Premium member, login here to access the full content.