Reopening based on assessment record without tangible material is unsustainable

Axis Bank Limited Vs ACIT (Gujarat High court)

Gujarat High Court held that re-opening sought on the basis of assessment record without any fresh tangible material is unsustainable in law.

Facts- The case of the petitioner was selected for revision u/s. 263 of the Act by the higher authority of then assessing officer i.e. Principal Commissioner of Income Tax and u/s. 143(3) read with Section 263 of the Act, the total income of the petitioner was revised and determined as Rs.122,00,22,24,051/-. The petitioner was then served with the notice u/s. 148 of the Act on 26.03.2021 asking the petitioner to file return of income of Assessment Year 2015-16. The petitioner without prejudice to the stand that may be taken submitted return of income in compliance of notice u/s. 148 of the Act and submitted return of income on 28.05.2021 and sought for reasons recorded for re-opening of assessment. It is the case of the petitioner that reasons dated 22.03.2021 were provided on 14.06.2021 vide E-mail. As a result of this, preliminary objections vide communication dated 07.07.2021 were submitted questioning the validity of notice under Section 148 of the Act. The respondent authority thereafter has disposed of the objections on 09.11.2021 and simultaneously, on 09.11.2021, issued two notices calling upon the petitioner to supply details in relation to the reassessment by 24.11.2021. Since this is in clear conflict with the guidelines which are prescribed by the decision of this Court, wherein a clear period is prescribed to be given to the petitioner to challenge the notice under Section 148 of the Act after the order disposing of the objections are issued.

By way of present petition the petitioner has assailed the impugned notice dated 26.03.2021 issued under Section 148 of the Act and simultaneously also prayed for setting aside the order dated 09.11.2021 by declaring it to be unsustainable.

Conclusion- Apex Court in the case of CIT v. Kelvinator of India Ltd. has held that one needs to give a schematic interpretation to the words reason to believe failing which, section 147 would give arbitrary powers to the Assessing Officer to reopen assessments based on mere change of opinion which cannot be per se reason to reopen. Apex Court also held that the Assessing Officer has no power to review and he has the power to reopen provided there is tangible material to come to the conclusions that there is escapement of income from assessment and there was a failure on the part of the assessee to disclose truly and fully all material facts necessary to take the case out of the restrictions imposed by proviso to section 147 of the Act.

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