ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 14(1)(2), MUMBAI, MUMBAI vs. ASHITKUMAR GUNVANTRAI SHAH, MUMBAI

The revenue has taken the following grounds: “1. "On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in holding impugned notice issued under section 148 dated 30.03.2019 as void ab initio and bad in law without appreciating the fact that the then assessing officer recorded the reasons and had reason to believe that the income to the tune of Rs. 2,13,73,500/- has escaped assessment within the meaning of clause (c) of explanation 2 of section 147 of the Act. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in holding impugned notice issued under section 148 dated 30.03.2019 as void ab initio and bad in law without appreciating the fact that the then assessing officer issued notice u/s 148 of the Act after taking approval from specified authority u/s within the meaning of section 151 of the Act. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in holding impugned notice issued under section 148 dated 30.03.2019 as void ab initio and bad in law without appreciating the fact that the then assessing officer issued notice u/s 148 of the Act within six years from end of the Assessment year within the meaning of section 149 of the Act." 4. The appellant craves to leave, to add, to amend, to vary and/or alter any of the above ground as and when deemed necessary.”

The brief facts of the case are that the assessee filed the return declaring total income amount to Rs. 134,59,020/-. Subsequently, the case was selected for scrutiny and the assessment u/s. 143(3) of the Act was completed on 07.03.2015 determining the total income amount to Rs. 1,34,59,020/-. Subsequently, the case was reopened for scrutiny u/s. 147 of the Act by way of issuance notice u/s. 148 on 30.03.2017, and order was passed u/s. 143(3) r.w.s. 147 dated 04.12.2017 by disallowing donation amount to rupees 14 lakhs which was treated as non-genuine. Therefore, total income was computed amount to Rs. 1,48,59,020/-. Subsequently, the case was further reopened for scrutiny u/s. 147 by issuing notice u/s. 148 on 30.03.2019, which was duly served upon assessee company. The assessee company e-filed its return on 25.07.2012 by declaring total income Rs. 1,34,59,020/-. The assessment was completed and the Ld. AO had considered the sale of immovable property amount to Rs. 2,13,73,500/- as non-genuine sale of land in Ahmedabad and the declared LTCG of Rs. 1,98,60,976/-, which was simultaneously claimed deduction u/s. 54F of the Act was rejected. Finally, the Ld. AO had made the addition amount to Rs. 2,13,73,500/- as unexplained cash credit u/s. 68 of the Act. The aggrieved assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) had considered the legal grounds of the assessee and allowed the appeal of the assessee. Being aggrieved, the revenue filed an appeal before us.

The Ld. DR argued and contended that the Ld. CIT(A) had erred to dismiss the entire assessment order, which was passed u/s. 147 of the Act. The Ld. DR stands in favour of the orders of Ld. AO.

The Ld. AR argued and contended that the assessee’s case was taken for scrutiny and the scrutiny was completed u/s. 143(3) of the Act on dated 07.03.2025. Later on, the assessee’s case was reopened u/s. 147 by issuance notice u/s. 148 and finally the order was passed u/s. 143(3) r.w.s. 147 by disallowing the donation amount to Rs. 14 lakhs. Subsequently, the case was further reopened u/s. 148 and the addition was made related to sale of land at Ahmedabad amount to Rs. 2,13,73,500/- & in that connection the deduction u/s 54F was rejected. So the reopening u/s 147 is bad in absence of any new tangible material and the alleged transaction was declared in return of income. The Ld. AR respectfully relied on the order of the Ld. CIT(A) in para number 6.8. The relevant paragraph is reproduced as below: “6.8 I find merit in the contention of the appellant that no new facts had come to the notice of the Ld. AO, and that the reopening was based merely on a change of opinion by the current Ld. AO. The Hon'ble Bombay High Court, being the jurisdictional High Court in the appellant's case, while adjudicating Writ Petition No. 1752 of 2022 along with Writ Petition No. 2966 of 2022 in the case of M/s. Bharat Petroleum Corporation Ltd., quashed the notice issued under section 148, observing that: "In fact, from seeing the reasons, we find that the Assessing Officer, after relying upon the data already furnished by the Assessee during the original scrutiny proceedings under Section 143(3), comes to the conclusion that income has escaped assessment. Once this is the case, we are clearly of the view that even so far as the reasons for reopening the assessment for AY 2014-15 on the ground of the Assessee allegedly claiming a wrong deduction under Section32AC, is without jurisdiction as there is no failure on the part of the Assessee to disclose fully and truly all material facts in relation to the deduction claimed under Section 32AC for AY 2014-15. In fact, on perusing the reasons, it is clear that this is nothing but a "change of opinion" of a subsequent Assessing Officer, who now seeks to reopen the assessment for AY 2014- 15. This is wholly impermissible in law. In these circumstances, we find that even so far as Writ Petition No. 2966 of 2022 is concerned, the same deserves to be allowed" 6.9 In the instant case as well, I find that the AO formed an opinion on the basis of information already furnished by the assessee during the scrutiny assessment proceedings. Accordingly, relying on binding judicial precedents, I hold that the impugned notice issued under section 148 dated 30.03.2019 is void ab initio and bad in law. 7.0 Since I have already adjudicated the issue regarding the validity of the notice issued under section 148 of the Act, I do not consider it necessary to examine the merits of the addition made in the assessment order passed under section 143(3) of the Income-tax Act, dated 20.12.2019. 8.0 Result: The appeal of the appellant is allowed.”

We have heard the rival submissions and perused the material available on record. The controversy before us is confined to the validity of the second reopening of the assessment by issuance of notice under section 148 of the Act, dated 30.03.2019. It is an admitted position that the original assessment was completed under section 143(3) of the Act and, thereafter, the assessment was once reopened under section 147 of the Act, culminating in an order under section 143(3) read with section 147 of the Act. Subsequently, the assessment was again reopened by issuance of the impugned notice dated 30.03.2019 in relation to the sale of immovable property at Ahmedabad. On perusal of the findings recorded by the Ld. CIT(A), particularly paragraphs 6.8 and 6.9 reproduced hereinabove, we find that the Ld. CIT(A) has recorded a categorical finding that no new fact or tangible material had come to the notice of the Ld. AO and that the subsequent reopening was founded upon information and material which were already available on record during the earlier assessment proceedings. The Revenue has not brought before us any material to controvert this factual finding of the Ld. CIT(A) or to demonstrate the existence of any fresh tangible material forming the basis of the impugned reopening.

It is well settled that the power of reassessment cannot be exercised merely to review an earlier assessment on the basis of a change of opinion. The Hon'ble Supreme Court in CIT v. Kelvinator of India Ltd. reported in [2010] 320 ITR 561 (SC) has explained that, even after the amendment of section 147 with effect from 01.04.1989, the concept of “change of opinion” continues to operate as an in-built test against abuse of the reassessment power and that there must be tangible material for formation of the belief that income has escaped assessment.

In the present case, the Ld. CIT(A) has also followed the decision of the Hon'ble jurisdictional Bombay High Court in Bharat Petroleum Corporation Ltd. (supra) referred to in paragraph 6.8 of the impugned appellate order. Considering the factual finding that the impugned reassessment was initiated on the basis of material already available with the Department and in the absence of any fresh tangible material being demonstrated before us, we find no infirmity in the conclusion reached by the Ld. CIT(A) that the notice issued under section 148 dated 30.03.2019 is unsustainable in law.

The Revenue's contentions regarding approval under section 151 and issuance of the notice within the period prescribed under section 149 do not, by themselves, cure the foundational defect in the assumption of jurisdiction under section 147 where the reopening itself is based merely upon a change of opinion. Accordingly, we find no reason to interfere with the impugned appellate order. Ground Nos. 1 to 3 raised by the Revenue are therefore, dismissed. Ground No. 4 being general in nature requires no separate adjudication.

In the result, the appeal of the revenue bearing ITA No. 5776/Mum/2026 is dismissed. Order pronounced in the open court on 15th day of September 2026.