Gujarat High Court Judgments — 2021

The High Court held that both questions of law were not substantial questions of law and therefore the appeal could not be admitted. Regarding the first issue (Section 14A), the Court noted that the issue was covered by its own prior decision in Principal Commissioner of Income-Tax vs. Shreno Ltd. (2018) 409 ITR 401 (Guj.), which had relied on Supreme Court decisions like S.A. Builders Ltd. and the principle that if an assessee demonstrates availability of surplus interest-free funds for investments generating tax-free income, disallowance under Section 14A is not justified. For the second issue (Section 36(1)(iii)), the Court found concurrent findings of the CIT(A) and ITAT that the advances to the subsidiary were for commercial expediency, citing the previous practice of charging interest, the intention to revive the subsidiary to protect its own substantial investment, and referencing Supreme Court judgments in S.A. Builders Ltd. and Hero Cycles (P) Ltd. The Court emphasized that appeals under Section 260A are maintainable only on substantial questions of law, and the findings of fact by the Tribunal cannot be disturbed.

The High Court dismissed the Special Civil Application filed by the Principal Commissioner of Income Tax (Central), Surat. The Court noted that it had previously dealt with a common order dated September 9, 2020, passed by the Income Tax Appellate Tribunal, which was the subject of the present petition. In a prior instance, the High Court had dismissed a similar petition (Special Civil Application No. 7520 of 2021) by a detailed order dated June 24, 2021. To avoid duplication, the present petition was disposed of in terms of the said earlier order. Therefore, the petition was dismissed accordingly, without delving into the specific merits of the ITAT's order.

The High Court dismissed the petition. Regarding the first issue, the Court held that the Assessing Officer's satisfaction for reopening was subjective and based on fresh material from investigation wings, indicating systemic tax evasion. The information received from DDIT (Inv.) Unit-1(3), Ahmedabad, and Pr. DIT (Inv.), Unit-2, Mumbai, regarding the petitioner being a beneficiary of accommodation entries and involved in bogus LTCG and contrived losses through penny stocks like Dhvanil Chemicals Ltd., Veronica Production Ltd., and VMS Industries Ltd., provided a valid reason to believe that income had escaped assessment. The Court found no error in the Assessing Officer initiating proceedings under Section 147/148 even after a scrutiny assessment under Section 143(3), as the satisfaction was based on additional fresh material. On the issue of sanction under Section 151, the Court distinguished the present case from Chhugamal Rajpal (supra), noting that the Assessing Officer had recorded detailed reasons and dealt with objections, and the sanction was duly approved. The Court also held that the question of whether income had escaped assessment could not be decided at the objection stage, especially when the assessee was assessed under Section 115JB. The Court relied on the decision in Mehrunnisa Mohamed Fazal Maniar v. Income Tax Officer, which dismissed similar petitions challenging Section 147/148 proceedings based on fresh material from the same search.

The Court held that while the proposition that an alternative remedy is not a bar to a writ petition if the order is without jurisdiction or in violation of natural justice is correct, in this case, the objections raised by the petitioner were considered by the respondent. The petitioner failed to demonstrate any violation of principles of natural justice or lack of jurisdiction. Therefore, the proper course would have been to allow the Assessing Officer to frame the assessment and for the petitioner to pursue remedies under the Act if aggrieved by the assessment order. The Court relied on the Supreme Court's decision in Commissioner of Income-Tax Gujarat vs. Vijaybhai N. Chandrani, which emphasized exhausting alternative remedies before approaching the writ court. The Court found no merit in the petition and dismissed it. The Court also noted that contentions regarding mistaken identity and borrowed belief were not raised before the AO and were taken for the first time in the petition.

The High Court held that the present petition should be dismissed in terms of its earlier detailed order dated 24.06.2021 passed in Special Civil Application No. 7520 of 2021. This implies that the grounds or issues raised by the petitioner in the present Special Civil Application were found to be without merit or were otherwise disposed of in the prior judgment. The operative direction was to dismiss the petition, thereby upholding the ITAT's order indirectly. No specific issue was left undecided; the petition was dismissed on the basis of the prior ruling.

The High Court held that the present appeal under Section 260-A was not maintainable. The Revenue had already filed Miscellaneous Applications before the ITAT for rectification of its order dated 14.8.2019, which were dismissed on 9.9.2020. This dismissal was challenged by the Revenue before the High Court via Special Civil Application No. 7520 of 2021, which was dismissed in limine. The High Court found no illegality or infirmity in the ITAT's order dismissing the rectification applications. The Court reasoned that the circulars and office memorandum relied upon by the Revenue for filing appeals on merits were not retrospective and applied to appeals filed on or after 16.9.2019, pursuant to a special order from the CBDT. Since the original ITAT order was dated 14.8.2019, it predated these provisions. Consequently, the present appeal, challenging the original order after the rectification applications were dismissed and upheld by the High Court, did not survive and was dismissed.

The High Court held that the Circular dated 6.9.2019 and the Office Memorandum dated 16.9.2019 were not retrospective in effect. The Court noted that the language employed in the circular clearly indicated that appeals could be filed on merits as an exception where the Board, by way of a special order, directed filing of appeals in cases involved in organized tax evasion activity. The Court found no indication that these circulars were intended to have retrospective effect. The Tribunal had rightly interpreted that the applicability of the circulars for filing appeals would be decided by the Board through a special order and that a specific requirement of such an order was a must. Therefore, the appeals disposed of by the Tribunal on 14.8.2019 could not be considered as filed pursuant to a special order of the CBDT under the circulars dated 6.9.2019 and 16.9.2019. Consequently, the Tribunal had not committed any mistake apparent from the record that required rectification under Section 254(2). The High Court upheld the Tribunal's order dismissing the Miscellaneous Applications and, in view of the prior dismissal of the Special Civil Application, dismissed the present appeal.

The High Court held that the ITAT did not commit a mistake apparent from the record under Section 254(2) of the Income Tax Act, 1961. The Court reasoned that the CBDT Circular No. 23/2019 dated 06.09.2019 and the Office Memorandum dated 16.09.2019 were not in existence when the ITAT passed its order on 14.08.2019. Therefore, their non-consideration could not be a mistake apparent from the record. Furthermore, the Court found no substance in the submission that these subsequent circulars had retrospective effect. The language of the Circular dated 06.09.2019 indicated that appeals could be filed on merits as an exception where the Board, by special order, directed filing in cases of organized tax evasion. This suggested future applicability, not retrospective. The Court agreed with the ITAT's observation that a special order from the CBDT was a prerequisite for filing appeals under these exceptions. Consequently, the appeals disposed of on 14.08.2019 could not be considered as filed pursuant to such special orders. The impugned order of the ITAT dismissing the Miscellaneous Application was upheld.

The High Court dismissed all three petitions. The Court noted that the petitioner had already availed alternative statutory remedies by filing appeals before the CIT(Appeals) for the concerned assessment years. Furthermore, the petitioner had failed to comply with the mandatory requirements of the Direct Tax Vivad se Vishwas Act, 2020. Specifically, the petitioner had not paid the amount determined by the designated authority within the stipulated period and had not withdrawn the pending appeals as required by Section 4(3) of the DTVSV Act. The Court found no violation of any legal, statutory, or fundamental right of the petitioner. Therefore, the petitions, being devoid of merits, were dismissed.

The High Court dismissed all three petitions. The Court noted that the petitioner had already availed alternative statutory remedies by filing appeals before the CIT(Appeals) for the concerned assessment years. Furthermore, the petitioner had failed to comply with the mandatory requirements of the Direct Tax Vivad se Vishwas Act, 2020. Specifically, the petitioner had not paid the amount determined by the designated authority within the stipulated period and had not withdrawn the pending appeals as required by Section 4(3) of the DTVSV Act. The Court found no violation of any legal, statutory, or fundamental right of the petitioner. Therefore, the petitions, being devoid of merits, were dismissed.

The High Court dismissed all three petitions. The Court noted that the petitioner had already availed alternative statutory remedies by filing appeals before the CIT(Appeals) for the concerned assessment years. Furthermore, the petitioner had failed to comply with the mandatory requirements of the Direct Tax Vivad se Vishwas Act, 2020. Specifically, the petitioner had not paid the amount determined by the designated authority within the stipulated period and had not withdrawn the pending appeals as required by Section 4(3) of the DTVSV Act. The Court found no violation of any legal, statutory, or fundamental right of the petitioner. Therefore, the petitions, being devoid of merits, were dismissed.

The High Court held that the Assessing Officer (AO) had the jurisdiction to reopen the assessment under Section 147/148 of the Income Tax Act. The Court found that the impugned action was initiated based on material recovered during a survey action on Shri Kamal J. Zaveri, which included tax bills and accommodation loan entries purportedly linking the petitioner to the tune of Rs. 67,64,463/- for AY 2012-13. This constituted tangible material with a prima facie link to the petitioner, forming a basis for the AO's belief that income had escaped assessment. The Court reiterated the principle that the sufficiency or correctness of the material cannot be examined at the stage of reopening, only whether there was "reason to believe" based on tangible material. The Court distinguished the petitioner's cited case of GKN Driveshafts (India) Limited, noting that in the present case, the AO had disposed of the objections by passing a speaking order, which was found to be just and proper. Therefore, the petition was dismissed as devoid of merit. No issue was expressly left undecided.

The High Court held that the Assessing Officer (AO) had not properly dealt with the preliminary objections raised by the writ applicants against the reasons recorded for reopening the assessment. The Court noted that the assessee had specifically raised objections regarding transactions with Sampada Chemicals Ltd. (SCL) for AY 2011-12 and subsequent clearance of outstanding amounts, supported by ledger accounts. However, the AO's order disposing of these objections was found to be mechanical and lacking application of mind, violating the principle laid down by the Apex Court in GKN Driveshaft (India) Ltd. Vs. Income tax Officer & Ors. [(2003) 259 ITR 19], which mandates a speaking order addressing all issues raised. Consequently, the orders disposing of the objections were set aside, and the matters were remitted to the AO to pass a fresh speaking order after considering the objections. The Court explicitly stated that it had not expressed any opinion on the merits of the case.

The High Court held that the Assessing Officer (AO) had not properly dealt with the preliminary objections raised by the writ applicants against the reasons recorded for reopening the assessment. The Court noted that the assessee had specifically raised objections regarding transactions with Sampada Chemicals Ltd. (SCL) for AY 2011-12 and subsequent clearance of outstanding amounts, supported by ledger accounts. However, the AO's order disposing of these objections was found to be mechanical and lacking application of mind, violating the principle laid down by the Apex Court in GKN Driveshaft (India) Ltd. Vs. Income tax Officer & Ors. [(2003) 259 ITR 19], which mandates a speaking order addressing all issues raised. Consequently, the orders disposing of the objections were set aside, and the matters were remitted to the AO to pass a fresh speaking order after considering the objections. The Court explicitly stated that it had not expressed any opinion on the merits of the case.

The High Court allowed the writ application and quashed the impugned notice dated 31.03.2018. The Court found that the reasons recorded by the AO for reopening the assessment were factually incorrect and contrary to the material on record. The AO's assertion that he could not refer the matter to the TPO or examine the issue due to delayed submission of revised reports was found to be erroneous, as the revised reports were received by March 14, 2016, well before the assessment order was passed on March 18, 2016. The Court noted that the AO had a conscious decision not to examine the issue of Arm's Length Price (ALP) determination or refer it to the TPO, relying on instructions. This was considered a 'change of opinion' by the AO, which, in the absence of tangible material discovered after the original assessment, cannot be the basis for reopening under Section 147 of the Act. The Court relied on the principles laid down in Commissioner of Income Tax Vs. Usha International Ltd. and Commissioner of Income Tax Vs. Kelvinator of India Ltd., emphasizing that reassessment proceedings are invalid if an issue was raised and answered in the original assessment, and the AO subsequently forms a different opinion without new tangible material. The Court concluded that the AO's belief that income had escaped assessment was not sustainable based on the recorded reasons.

The High Court held that the reopening of assessment for AY 2011-12 and 2012-13 was unjustified and based on erroneous premises. The Court noted that the land was transferred to M/s. Swaminarayan Enterprise as a capital contribution in the partnership firm as per a deed dated August 15, 2008. According to Section 45(3) of the Act, when a partner contributes a capital asset to a firm, the value recorded in the firm's books is considered the full value of consideration for computing capital gains in the previous year of transfer. The Court found that no amount was credited by the firm to the assessee's account as consideration for the land in AY 2009-10, and the recorded value of consideration was NIL. Therefore, the transfer of land as capital contribution occurred in 2008, making it assessable only in AY 2009-10, and not in AY 2011-12. The Court concluded that the reasons recorded lacked validity, the AO proceeded on an erroneous premise, and there was insufficient material to form a belief that income had escaped assessment. The information received was considered vague, and the reopening was for a "roving and fishing enquiry." Consequently, the impugned notices were quashed and set aside.

The High Court held that the reopening of assessment for AY 2011-12 and 2012-13 was unjustified and based on erroneous premises. The Court noted that the land was transferred to M/s. Swaminarayan Enterprise as a capital contribution in the partnership firm as per a deed dated August 15, 2008. According to Section 45(3) of the Act, when a partner contributes a capital asset to a firm, the value recorded in the firm's books is considered the full value of consideration for computing capital gains in the previous year of transfer. The Court found that no amount was credited by the firm to the assessee's account as consideration for the land in AY 2009-10, and the recorded value of consideration was NIL. Therefore, the transfer of land as capital contribution occurred in 2008, making it assessable only in AY 2009-10, and not in AY 2011-12. The Court concluded that the reasons recorded lacked validity, the AO proceeded on an erroneous premise, and there was insufficient material to form a belief that income had escaped assessment. The information received was considered vague, and the reopening was for a "roving and fishing enquiry." Consequently, the impugned notices were quashed and set aside.

The High Court held that the impugned notice dated 31.03.2018 under Section 148 of the Act was invalid and without jurisdiction. The Court reasoned that the reassessment was sought to be initiated after the expiry of 4 years from the end of the relevant assessment year. In such cases, the proviso to Section 147 mandates that the AO must have reason to believe that income chargeable to tax has escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts. The Court found that the assessee had disclosed all material facts regarding the transaction of M/s. Aarya Global Shares and Securities Ltd. during the previous assessment proceedings, and these facts were within the knowledge of the AO. The AO had the opportunity to make further inquiries or infer the nature of the transaction but did not do so, indicating an examination and formation of an opinion. Relying on the principle laid down in Commissioner of Income Tax Vs. Usha International Ltd., the Court held that reassessment proceedings are invalid if an issue was raised and answered in favour of the assessee, or if an issue was raised and answered by the assessee, and the AO did not make any addition, implying an opinion was formed. Therefore, the reopening was hit by the principle of 'change of opinion' and failed to satisfy the conditions precedent for exercising powers under Section 147 after 4 years.

The High Court held that it could only admit an appeal under Section 260A if it involved a substantial question of law. The Court noted that the ITAT had given the assessee one more opportunity by remanding the matter for de novo assessment, keeping all issues open. The learned Senior Standing Counsel for the Revenue failed to point out any question of law, let alone a substantial question of law, involved in the appeal. Relying on the Supreme Court's decision in M. Janardhana Rao vs. Joint Commissioner of Income Tax, which emphasized the need for a substantial question of law and the inability to disturb findings of fact, the Court found no such question. Therefore, the appeal was dismissed without going into the merits of the case.

The High Court held that the Assessing Officer (AO) had sufficient material to initiate proceedings under Section 147 of the Income Tax Act, 1961. The court found that the AO had applied his independent mind to the information regarding penny stock transactions in Tuni Textiles Ltd. and the claim of LTCG. The court noted that the information suggested a live link between the material indicating escapement of income and the AO's belief. Furthermore, the court examined the issue of valid sanction and observed that the approval for reopening was provided after due application of mind by the concerned authorities. Therefore, the court concluded that the assumption of jurisdiction by the AO under Section 147 was not without the authority of law and that the notice was sustainable. The assessee failed to make out a case for quashing the notice.

The High Court held that the Assessing Officer (AO) did not properly deal with the preliminary objections raised by the writ applicant against the reasons recorded for reassessment. The Court noted that the AO's order disposing of the objections, stating that the objections were considered and not acceptable, and that transactions with M/s Rashmi Diamond were bogus and the difference in credit entries was not brought to notice during assessment, did not reflect a proper application of mind. The Court relied on the Supreme Court's decision in GKN Driveshafts (India) Ltd. and the Delhi High Court's decision in SABH Infrastructure Ltd., emphasizing that the disposal of objections is a quasi-judicial function that requires dealing with each objection and providing proper reasons, reflecting an application of mind, and not a mechanical ritual. The Court found that the AO's order was passed mechanically and without meaningful application of mind, violating the directions of the Apex Court. Consequently, the order disposing of the objections was set aside, and the matter was remitted to the AO to consider the objections and pass a fresh speaking order in accordance with the law. The Court explicitly stated that it had not expressed any opinion on the merits of the case.

The Tribunal held that the Assessing Officer (AO) failed to properly deal with the objections raised by the assessee against the reasons recorded for reassessment. The order disposing of the objections was found to be lacking in proper application of mind and did not reflect a meaningful consideration of each objection. The Tribunal relied on the Supreme Court's decision in GKN Driveshafts (India) Ltd. and the Delhi High Court's decision in SABH Infrastructure Ltd. to emphasize that the disposal of objections is a quasi-judicial function and requires a speaking order that addresses each objection with proper reasoning. The AO's order was deemed to be mechanical and not in accordance with the law. Consequently, the order disposing of the objections was set aside, and the matter was remitted back to the AO to pass a fresh speaking order after considering the assessee's objections. The Tribunal clarified that it had not expressed any opinion on the merits of the case. The AO was directed to complete this exercise within six weeks, and if the fresh order was adverse, the assessee would be granted four weeks to seek legal recourse.

The High Court held that the Assessing Officer (AO) failed to properly deal with the objections filed by the writ applicant against the reasons recorded for reassessment. While disposing of the objections, the AO concluded that the objections were considered but not acceptable on merits, without adequately addressing each specific objection raised by the applicant. The Court referred to the Supreme Court's decision in GVK Driveshaft and the Delhi High Court's decision in SABH Infrastructure Ltd., emphasizing that the exercise of considering objections is a quasi-judicial function requiring proper application of mind and dealing with each objection individually by passing a speaking order. The AO's order disposing of the objections was found to be mechanical and lacking meaningful consideration, violating the Apex Court's directions. Consequently, the order disposing of the objections dated August 26, 2019, was set aside, and the matter was remitted to the AO to pass a fresh speaking order after considering the assessee's objections. The Court explicitly stated that no opinion was expressed on the merits of the case.

The High Court held that the Assessing Officer (AO) failed to properly deal with the objections filed by the writ applicant against the reasons recorded for reassessment. The Court noted that the AO's order disposing of the objections did not reflect a proper application of mind and was passed mechanically, without meaningfully addressing each objection. Relying on the Supreme Court's decision in GKN Driveshaft (India) Ltd. v. Income Tax Officer and others, the Court emphasized that the AO is bound to dispose of objections by a speaking order that deals with each objection and provides proper reasons. The Court found that the AO's order dated November 15, 2019, was in violation of this directive. Consequently, the Court set aside the AO's order disposing of the objections and remitted the matter back to the AO to pass a fresh speaking order after considering the assessee's objections. The Court explicitly stated that no opinion was expressed on the merits of the case.

The High Court held that the Assessing Officer (AO) did not properly deal with the objections raised by the assessee against the reasons recorded for reassessment. The Court found that the AO's order disposing of the objections was passed mechanically and without proper application of mind, which is a violation of the directions issued by the Supreme Court in GKN Driveshafts (India) Ltd. and the Delhi High Court in SABH Infrastructure Ltd. The Court noted that the specific objections raised by the assessee were not adequately addressed. Consequently, the order dated November 18, 2019, disposing of the assessee's objections, was set aside. The matter was remitted back to the AO to consider the objections afresh and pass a fresh speaking order in accordance with the law within six weeks. The Court clarified that it had not expressed any opinion on the merits of the case. If the fresh order is adverse to the assessee, they will have four weeks to pursue legal remedies.

The High Court disposed of the petition with a direction to the respondent Settlement Commission. The Court directed the Settlement Commission to consider the facts as stated by the petitioners and recorded in the High Court's order. If these facts were found to be correct, the Settlement Commission was to proceed to pass/issue appropriate formal orders on or before March 31, 2021. If the facts were not found to be correct, the Commission was granted the liberty to proceed in accordance with law, exercising its own wisdom and discretion. The Court acknowledged that the Finance Bill 2020-21 had not yet been enacted, and therefore, the position should be considered in the absence of its provisions. No issue was expressly left undecided; the decision was conditional on the verification of facts by the Settlement Commission.

The High Court held that the Assessing Officer (AO) failed to properly deal with the preliminary objections filed by the writ applicant against the reasons for reassessment. The Court noted that the assessee had specifically raised objections regarding the transaction with M/s. Chetan Enterprises, stating it was on behalf of M/s. Harsh Enterprises for outstanding sales consideration from AY 2011-12. The AO's order disposing of objections, particularly para 6.1, did not reflect proper application of mind to the objections raised, and it could not be said that the objections were disposed of by a reasoned order. Citing the Supreme Court judgment in GKN Divershaft (India) Ltd. Vs. Income-tax Officer & Ors., the Court emphasized the AO's obligation to deal with issues raised in objections and pass a speaking order. The Court found that the AO passed the order disposing of objections mechanically and without meaningful application of mind, in violation of the Apex Court's directions. Therefore, the order disposing of objections dated 04.10.2019 was set aside, and the matter was remitted to the AO to pass a fresh speaking order after considering the assessee's objections. The Court clarified it had not expressed any opinion on the merits of the case.

The High Court disposed of the petition with a direction to the respondent No. 1, the Settlement Commission, to consider the facts as stated by the petitioner and recorded in the order. If these facts were found to be correct, the Commission was directed to proceed to pass/issue appropriate formal orders on or before March 31, 2021. If the facts were not found to be correct, the Commission was granted the liberty to proceed in accordance with law at its own discretion. The court noted that the Finance Bill 2020-21 had not yet been enacted, and therefore, the position in the absence of its contents was to be considered. The court did not explicitly leave any issue undecided, but the operative part was conditional on the verification of facts by the Settlement Commission.

The Gujarat High Court disposed of the petition with a direction to the respondent No. 1, the Settlement Commission. The Commission was directed to consider the facts as stated by the petitioner and recorded in the court's order. If these facts were found to be correct, the Settlement Commission was to proceed to pass/issue appropriate formal orders on or before March 31, 2021. If the facts were not found to be correct, the Commission was granted the liberty to proceed in accordance with law as per its own wisdom and discretion. The court did not explicitly decide on the substantive merits of the settlement itself but focused on directing the procedural completion of the order.

The High Court acknowledged the difficulty in granting exemption benefits under Section 11 without the registration number for e-filing. However, it found it unacceptable for the department to presume no registration certificate was ever issued simply because records are unavailable with both the trust and the department. The Court noted the trust's historical claim of exemption and the destruction of its records in the 1978 floods. It directed the trust to produce all available records to the department. The department was instructed to minutely examine these records, provide an opportunity of hearing to the trust, and take an appropriate decision in accordance with the law within four weeks. The interim order passed by the Court was to continue until a decision was taken. The Court expressed hope for an amicable resolution.

The High Court allowed the writ application and quashed the impugned notice of reopening. The Court held that since the notice was issued beyond four years, the crucial requirement of the proviso to Section 147, namely, that income chargeable to tax had escaped assessment due to the assessee's failure to disclose truly and fully all material facts, must be satisfied. The reasons recorded by the Assessing Officer for reopening were based on verification of the assessment records of the year under consideration. The Court noted that it was not the case of the Revenue that full details pertaining to the Section 80-IA deduction claim were not furnished. The assessment order under Section 143(3) also referred to this deduction. The Court reasoned that merely because an irregularity in the claim might have been noticed in a subsequent year's assessment would not, by itself, satisfy the requirements of the proviso to Section 147. The entire claim and reasons for revision were before the Assessing Officer during the original assessment, and the claim was processed. Therefore, the notice for reopening issued beyond four years could not be sustained. The Court found it unnecessary to examine the rival contentions regarding the validity of the deduction claim itself.

The High Court held that the reopening of the assessment under Section 148 was without jurisdiction and quashed the impugned notice and the subsequent assessment order. The Court reasoned that the AO had previously applied his mind to the facts and material available regarding the claim under Section 54B during the original assessment proceedings for AY 2012-13. The assessment order itself indicated that the issue of long-term capital gain and the extent of exemption was examined, and only a difference of Rs. 1,51,572/- was added due to a shortfall in payment for the new agriculture land, with the assessee agreeing to pay tax on this amount. Therefore, initiating reassessment proceedings on the same set of facts amounted to a review of the earlier proceedings and a 'change of opinion' by the AO, which is impermissible. The Court noted that the revenue failed to demonstrate any new material that surfaced during reassessment proceedings or that the assessee had not disclosed all primary facts fully and truly at the stage of the original assessment. The Court relied on the principles laid down in CIT Vs. Usha International Ltd. (Delhi High Court) and CIT Vs. Kelvinator India Ltd. (Apex Court) regarding the invalidity of reassessment proceedings based on a change of opinion and the requirement of tangible material for escapement of income. The operative direction was to quash and set aside the notice dated 31.03.2019 and the assessment order dated 29.08.2019.

The High Court held that the assumption of jurisdiction by the Assessing Officer under Section 147 of the Act to reopen the assessment was without authority of law and the notice dated March 28, 2019, under Section 148 was unsustainable. The Court noted that the original assessment under Section 143(3) had already considered and made additions, including an amount of Rs. 20,00,055 received from Shri Shaileshkumar Naika, under Section 68 of the Act. The Court found that the AO had not applied an independent mind and had solely relied on information from the Investigation Wing. It was observed that the revenue did not present any material to suggest that the transaction reported by the Investigation Wing was distinct from what was considered in the original assessment. Therefore, there was no tangible material for reopening. The Court concluded that the AO acted mechanically and any independent satisfaction that income had escaped assessment was not reflected. The revenue was also found to have traveled beyond the scope of the reasons recorded. Consequently, the formation of belief by the AO was considered vague and based on irrelevant material.

The High Court held that the impugned notice for reopening the assessment was without authority of law. The Court found that the initiation of proceedings was nothing but a mere change of opinion. It reasoned that the original assessment order and the materials furnished by the assessee at that stage showed a conscious application of mind by the Assessing Officer to the issue of deduction, and after considering the evidence, the officer had found it fit to allow the claim. Therefore, a mere change of opinion while considering the same material, without any tangible new material, could not form the basis for a belief that income had escaped assessment. Furthermore, the Court noted that the assessee had disclosed true facts regarding the deduction claim, which were reflected in the audit report and Form 10CCB, and the original Assessing Officer had not disallowed the deduction. Consequently, the condition precedent for reopening the assessment beyond four years was not satisfied. The Court quashed and set aside the impugned notice dated March 30, 2019, issued under Section 148.

The High Court held that the writ applications succeed and are allowed. The impugned notice dated 29.03.2019 issued under Section 148 of the Income Tax Act for AY 2012-13 in both matters is quashed and set aside. The Court reasoned that even when proceedings under Section 147 are initiated with reference to an intimation under Section 143(1), the ingredients of Section 147 must be fulfilled. This means there must exist a 'reason to believe' that income chargeable to tax has escaped assessment, supported by tangible material in possession of the Assessing Officer subsequent to the intimation under Section 143(1). The Court relied on precedents like Inductotherm (India) Pvt. Ltd. vs. M. Gopalan, Dy.CIT and Indivest Pte. Ltd. vs. Addl. DIT, which emphasized the necessity of tangible material and a live link between the reasons recorded and the formation of the belief. In this case, there was no whisper of any tangible material that came into the AO's possession after the Section 143(1) intimation, making the reopening arbitrary and unsustainable. The Court noted that an assessment under Section 143(1) cannot be reopened under Section 147 unless new, fresh, tangible material comes into the AO's possession.

The High Court held that the writ applications succeed and are allowed. The impugned notice dated 29.03.2019 issued under Section 148 of the Income Tax Act for AY 2012-13 in both matters is quashed and set aside. The Court reasoned that even when proceedings under Section 147 are initiated with reference to an intimation under Section 143(1), the ingredients of Section 147 must be fulfilled. This means there must exist a 'reason to believe' that income chargeable to tax has escaped assessment, supported by tangible material in possession of the Assessing Officer subsequent to the intimation under Section 143(1). The Court relied on precedents like Inductotherm (India) Pvt. Ltd. vs. M. Gopalan, Dy.CIT and Indivest Pte. Ltd. vs. Addl. DIT, which emphasized the necessity of tangible material and a live link between the reasons recorded and the formation of the belief. In this case, there was no whisper of any tangible material that came into the AO's possession after the Section 143(1) intimation, making the reopening arbitrary and unsustainable. The Court noted that an assessment under Section 143(1) cannot be reopened under Section 147 unless new, fresh, tangible material comes into the AO's possession.

The Tribunal held that the notice dated 28.03.2019 issued in the name of Lalubhai Gokalbhai (Annexure-A) was indeed issued to a dead person, and since the Revenue was aware of the death prior to its issuance, this notice is liable to be quashed and set aside. Regarding the notice dated 28.03.2019 issued to Hansaben Lalubhai Gokalbhai (Annexure-B) as the legal heir, the Tribunal found that while the notice numbers were the same, it appeared to be a corrective measure taken by the Revenue. The AO's order rejecting objections indicated that the case was reopened in the name of the legal heir. The Tribunal concluded that Annexure-B was a distinct and fresh notice issued correctly to the legal heir, and therefore, it was not invalid or bad in law, especially in light of Section 292B of the Act which allows for curing of defects. The Principal Commissioner had also perused the reasons and found it fit for issuing the notice under Section 148.

The High Court held that the impugned notice under Section 148 of the Income Tax Act, 1961, for reopening the assessment for AY 2013-14, was not sustainable in law and was liable to be quashed and set aside. The Court found that the Assessing Officer's belief that income had escaped assessment was based on a mere change of opinion, as the issues concerning deemed dividend and donation deduction were considered during the original scrutiny assessment. The Court relied on the Supreme Court's decision in CIT v. Kelvinator of India Ltd., which emphasizes that reopening of assessment under Section 147 cannot be based on a mere change of opinion without any tangible material to support the belief of escapement of income. The Court noted that the assessee had disclosed material facts and that the AO had failed to demonstrate any failure on the part of the assessee to disclose fully and truly all material facts. Therefore, the Assessing Officer lacked the necessary jurisdiction to reopen the assessment on the grounds presented. The writ application was allowed, and the rule was made absolute.

The High Court allowed the writ application and quashed the order disposing of the objections dated November 1, 2018. The Court held that the primary issue was whether the Section 148 notice was actually served upon the writ applicant. The Revenue itself conceded that the notice was not served upon the writ applicant at any point of time. The Court found the Revenue's attempt to dispatch the notice to the address at Kalol, Gandhinagar (where the agricultural land was situated) instead of the assessee's residential address at village Khorsam, Taluka Chanasma, District Patan, to be a mistake. Consequently, it was evident that the writ applicant could not have received the notice. The Court distinguished the case from Rajesh Sunderdas Vaswani (supra) as the latter dealt with the interpretation of 'issue' in Section 149 and the date of dispatch, whereas the present case revolved around the fundamental issue of non-service. The Court found the reassessment proceedings to be invalid due to the lack of service of the Section 148 notice.

The High Court held that the impugned notices issued under Section 148 of the Income Tax Act, 1961, were without the authority of law and were liable to be quashed and set aside. The Court reasoned that the reasons recorded by the Assessing Officer for reopening the assessment constituted a mere change of opinion, which is not sustainable in law. The issue of deduction under Section 80IB(10) was thoroughly examined during the original assessment under Section 143(3), and the AO had consciously arrived at a conclusion not to disallow the deduction. Similarly, explanations were provided for the commission paid and the cash deposit, and the AO did not make any additions or raise adverse views for AY 2011-12, implying acceptance of the assessee's contentions. The Court found no tangible material that came into the AO's possession after the original assessment was concluded, making reassessment based on a change of opinion impermissible. The assessee had disclosed all material facts fully and truly during the original assessment. Therefore, there was no basis or jurisdiction for the AO to believe that income had escaped assessment.

The High Court held that the order disposing of the assessee's objections to the Section 148 notice was not a speaking order and did not adequately consider the objections raised by the assessee. The court emphasized that the exercise of disposing of objections is not an empty formality and requires meaningful consideration and application of mind. Consequently, the court quashed and set aside the order disposing of objections and remitted the matter back to the Assessing Officer. The Assessing Officer was directed to reconsider the objections raised by the assessee and pass a fresh speaking order within four weeks. The court explicitly stated that it had not expressed any opinion on the merits of the case.

The High Court held that the impugned notices issued under Section 148 of the Income Tax Act, 1961, were without the authority of law and were liable to be quashed and set aside. The Court reasoned that the reasons recorded by the Assessing Officer for reopening the assessment constituted a mere change of opinion, which is not sustainable in law. The issue of deduction under Section 80IB(10) was thoroughly examined during the original assessment under Section 143(3), and the AO had consciously arrived at a conclusion not to disallow the deduction. Similarly, explanations were provided for the commission paid and the cash deposit, and the AO did not make any additions or raise adverse views for AY 2011-12, implying acceptance of the assessee's contentions. The Court found no tangible material that came into the AO's possession after the original assessment was concluded, making reassessment based on a change of opinion impermissible. The assessee had disclosed all material facts fully and truly during the original assessment. Therefore, there was no basis or jurisdiction for the AO to believe that income had escaped assessment.

The High Court held that the impugned notices issued under Section 148 of the Income Tax Act, 1961, were without the authority of law and were liable to be quashed and set aside. The Court reasoned that the reasons recorded by the Assessing Officer for reopening the assessment constituted a mere change of opinion, which is not sustainable in law. The issue of deduction under Section 80IB(10) was thoroughly examined during the original assessment under Section 143(3), and the AO had consciously arrived at a conclusion not to disallow the deduction. Similarly, explanations were provided for the commission paid and the cash deposit, and the AO did not make any additions or raise adverse views for AY 2011-12, implying acceptance of the assessee's contentions. The Court found no tangible material that came into the AO's possession after the original assessment was concluded, making reassessment based on a change of opinion impermissible. The assessee had disclosed all material facts fully and truly during the original assessment. Therefore, there was no basis or jurisdiction for the AO to believe that income had escaped assessment.

The High Court allowed the writ application. The Court found that the Revenue's case for reopening was not convincing. A significant ground for allowing the application was that the order dated 17th August 2018, disposing of the assessee's objections, was not a speaking order. The Court observed that not a single objection raised by the assessee had been even prima facie dealt with in the order. Consequently, the Court concluded that the impugned notice for reopening was not sustainable in law. The Court quashed and set aside the impugned notice. No specific issue was left undecided; the Court decided on the sustainability of the reopening notice and the validity of the objection rejection order.

The High Court held that the impugned notices issued under Section 148 of the Income Tax Act, 1961, were without authority of law and were liable to be quashed and set aside. The Court reasoned that the reasons recorded by the Assessing Officer for reopening the assessment constituted a mere change of opinion, which is not sustainable in law. The issue of deduction under Section 80IB(10) was thoroughly examined during the original assessment, and the AO had consciously decided not to disallow the deduction. Similarly, the issues of commission paid and cash deposits were explained by the assessee, and the AO did not make any additions. The Court found no tangible material that came into the AO's hands after the conclusion of the original assessment to justify reopening. The assessee had disclosed all material facts fully and truly during the original assessment proceedings. Therefore, there was no basis or jurisdiction for the AO to believe that income had escaped assessment. The writ applications were allowed, and the notices were quashed.

The High Court held that it should not interfere with the impugned notice for reopening the assessment. The Court reasoned that the Assessing Officer had tangible material in hand, including information about the investor companies being shell companies and the admission of an entry provider. This material provided a rational connection and a live link to the formation of the belief that income chargeable to tax had escaped assessment. The Court distinguished this from a mere change of opinion or a fishing inquiry. It reiterated the conditions for reopening beyond four years: (a) reason to believe that income escaped assessment, and (b) failure on the part of the assessee to disclose fully and truly all material facts. The Court found that the transaction itself was found to be bogus based on subsequent information, meaning the initial disclosure was not of true and full facts. The Court also found no merit in the issue of sanction under Section 151. The writ application was rejected, but the assessee was given the liberty to challenge the final assessment order before the CIT(A).

The High Court held that the Assessing Officer (AO) had sufficient material to initiate proceedings under Section 147 of the Income Tax Act, 1961. The court found that the AO had applied an independent mind to the information received regarding penny stock transactions of Karma Ispat Limited and formed a satisfaction that income chargeable to tax had escaped assessment. The court disagreed with the contention that the reopening was based on borrowed satisfaction, stating there was a live link between the material suggesting escapement of income and the AO's belief. Regarding the sanction under Section 151, the court noted that the approval was provided to the assessee at the stage of disposing of objections, indicating that the authorities had given approval after due application of mind and expressed satisfaction. Therefore, the court concluded that it could not be said that there was no material or grounds before the AO, and the assumption of jurisdiction under Section 147 was not without authority of law. The assessee failed to make out a case, and the writ application was dismissed.

The High Court held that the Assessing Officer (AO) had sufficient material to initiate proceedings under Section 147 of the Income Tax Act, 1961. The court found that the AO had applied his independent mind to the information concerning penny stock transactions in Tuni Textiles Limited and formed a belief that the claimed LTCG was chargeable to tax and had escaped assessment. This indicated a live link between the material suggesting escapement of income and the AO's belief. Regarding the sanction under Section 151, the court noted that the approval was provided to the assessee at the stage of disposing of objections, indicating that the authorities had applied their minds and expressed satisfaction with the reasons for reopening. The court disagreed with the contention that the reopening was based solely on information or borrowed satisfaction. Therefore, the court concluded that the AO had not acted without authority of law in reopening the assessment, and the notice was sustainable. The assessee failed to make out a case.

The High Court held that the Assessing Officer had sufficient material to initiate proceedings under Section 147 of the Act. The Court found that the AO had applied his independent mind to the information regarding penny stock transactions in Tuni Textiles Ltd. and formed an opinion that the LTCG claimed by the assessee was chargeable to tax and had escaped assessment. This indicated a live link between the material suggesting escapement of income and the AO's belief. The Court also examined the issue of valid sanction under Section 151 and noted that the approval was provided to the assessee at the stage of disposing of objections, indicating that the authorities had given approval after due application of mind. Therefore, the Court concluded that the assumption of jurisdiction by the AO under Section 147 was not without authority of law and the notice was sustainable. The assessee failed to make out a case.

The High Court held that the Assessing Officer failed to exercise his jurisdiction properly in disposing of the assessee's objections. Citing the Supreme Court's decision in GKN Driveshafts (India) Ltd. Vs. Income Tax Officer & Ors., the Court emphasized that the AO is bound to dispose of objections by passing a speaking order. The Court found that the AO's stance of deferring the examination of factual propositions to the reassessment proceedings was a failure to properly deal with the objections, which went to the root of the matter. The Court noted that the AO's approach prima facie suggested a lack of good reason to issue the reopening notice. Consequently, the Court quashed the order disposing of the objections and remitted the matter back to the AO for fresh consideration of the objections in accordance with law, directing the AO to pass a speaking order within four weeks. The Court also noted that if the order was adverse to the assessee, they could take recourse to law within four weeks of receiving the fresh order.