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Facts
The assessee's original assessment was completed in 2015. A previous reopening notice u/s 148 for AY 2012-13, issued in 2017, was quashed by the High Court in 2022 on grounds of change of opinion. A second notice u/s 148 was issued in 2019 to tax alleged share capital received from M/s. Vista Dealcom (P) Ltd. and M/s. Topflow Trading (P) Ltd., totaling Rs. 1.10 crore, as undisclosed income.
Held
The Tribunal held that the reopening of assessment based on the 2019 notice u/s 148 was invalid as it constituted a 'change of opinion'. The issue of share application money had been thoroughly examined during the original assessment proceedings, and the reasons recorded for reopening did not specify any failure by the assessee to truly and fully disclose material facts, nor did they provide specific details about the new information received.
Key Issues
Whether the reopening of assessment u/s 148, initiated by a second notice after a previous one was quashed, is valid when the underlying issue (share application money) was already examined during original assessment and the reasons recorded show a 'change of opinion' without alleging failure to disclose material facts.
Sections Cited
Section 250, Section 148, Section 147, Section 143(2)
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Income Tax Appellate Tribunal, “CUTTACK” BENCH, CUTTACK
Before: SHRI GEORGE MATHAN & SHRI RAJESH KUMAR
The captioned appeal by the assessee is against the order of the Ld. Commissioner of Income Tax (Appeal), NFAC, Delhi [hereinafter referred to as “the Ld. CIT(A)”] vide order no. ITBA/NFAC/S/250/2024- 25/1072036155(1) dated 09.01.2025 passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2012-13.
It was submitted by the Ld. AR that the original assessment in the case of the assessee came to be completed on 30.03.2015. It was the submission that subsequently notice u/s. 148 came to be issued and an assessment order came to be passed on 09.11.2017. The said notice u/s. 148 issued on 29.03.2017 was a subject matter of Writ Petition before the Hon’ble jurisdictional High Court at Cuttack in WP(C) No. 25229 of 2017. The same was disposed of by an order dated 15.02.2022 quashing the said notice u/s. 148 on the ground that the reopening was on a change of opinion. It was a submission that during the pendency of the Writ Petition before the Hon’ble jurisdictional High Court another notice u/s. 148 came to be issued on 27.03.2019. It was a submission that this notice u/s. 148 is allegedly for bringing to tax the alleged share capital received by the assessee to an extent of Rs.60 lakhs from M/s. Vista Dealcom (P) Ltd. and Rs. 50 lakh from Topflow Trading (P) Ltd. It was the submission that consequential assessment came to be passed wherein the Assessing Officer has brought to tax the amount of Rs. 50 lakh received as share application money from M/s. Topflow Trading (P) Ltd. The Ld. AR drew our attention to the reasons recorded at page 19 to 21 of the paper book which reads as follows:
It was the submission that the reasons recorded does not specify that there is violation on the part of the assessee truly and fully disclosed material facts for the purpose of assessment. It was the submission that in the case of original assessment, the share application money has been examined for this purpose. The Ld. AR placed before us a copy of the order sheet entry at page 16 and 17 which reads as follows:
It was the submission that on 16.03.2015 the issue of share application money has been specifically discussed on 24.03.2015. The issue was again discussed and confirmation letters were given on 27.03.2015. Again, this issue was discussed. It was the submission that the issue of the share application money has been discussed in the original assessment proceeding and the impugned assessment year is AY 2012-13 and the reopening is beyond four years being vide a notice dated 27.03.2019 and the reasons recorded by the Assessing Officer does not mention that there is any failure on the part of the assessee truly and fully disclosed all material facts required for this assessment. It was the submission that both on account change of opinion and on account of the
In reply, the Ld. Sr. DR vehemently supported the orders of the lower authorities and submitted that the information that has been received by the office of the Assessing Officer has led to the reopening of the assessment. It was the submission that the Assessee has not truly and fully disclosed all material facts for the purpose of this assessment. It was the submission that the Company M/s. Topflow Trading (P) Ltd. has not given any confirmation in regard to the share application money. It was the submission that the reopening and the consequential assessment order is liable to be upheld.
We have considered the rival submissions. A perusal of the reasons recorded which has been extracted above clearly shows that the Assessing Officer has not mentioned failure on the part of the assessee to truly and fully disclosed all the material facts received for making the assessment. A perusal of the order sheet entry also clearly shows that in the course of the original assessment proceeding, the Assessing Officer has examined the issue of share application money. The claim of the Ld. Sr. DR that the Assessing Officer has subsequently received information in regard to transaction of money through banking channel in the form of share application money would not help the revenue in so far as the reasons recorded does not mention as to when the Assessing Officer has received this information. The Assessing Officer also does not mention from where he has received this information. The Assessing Officer also does not mention what is the nature of information that he has received. The reasons recorded also admittedly does not mention any thing about the failure on the part of the assessee to disclose truly and fully all material facts for the purpose of assessment. This being so, as it is noticed that the reasons recorded by the Assessing Officer is merely on a change of opinion.
Tuff Tubes (Orissa) P. Ltd. AY 2012-13 So far as the issue of the share application money is concerned that has already been considered in the original assessment as evidenced by the order sheet entry records and the impugned reasons recorded does not contain any whisper in respect of the failure on the part of the assessee to disclose truly and fully all material facts required for the assessee’s issue. As also, in so far as in the course of the original assessment, in the course of verification, the assessee has produced all the evidence and the same have already been considered in assessment order, therefore, we are of the view that the reopening of assessment as done by the Assessing Officer by issuance of notice u/s. 148 of the Act on 27.03.2019 is unsustainable in law and consequently, the same stands quashed.