Reassessment Under Section 148 Based on Change in Opinion is Not Justified

The case at hand involves a housing society registered under the Maharashtra Cooperative Societies Act, which filed its return for the assessment year 2013-14, declaring a total income of Rs.11,39,990/- and claiming a deduction of Rs.2,62,10,090/- under Section 80P of the Act. Upon scrutiny assessment, the Assessing Officer issued a notice seeking details of various deductions and exemptions along with documentary evidence, which ultimately led to the passing of an order of assessment that allowed the claim of deduction under section 80P. Subsequently, the Assessing Officer sought to reopen the assessment by issuing an impugned notice under section 148. However, there was no tangible material with the Assessing Officer, and the reference was made only to the records of assessment. It thus appeared that nothing new had happened between the date of the order of assessment and the date of the issuance of the notice, and there was no new information received by the Assessing Officer, nor was any reference made to any new material on record. The Assessing Officer was simply attempting to accord a fresh consideration on the issue of deduction under section 80P claimed and allowed in favor of the assessee.

The case law in question establishes that if a query is raised during the assessment proceedings, and the assessee submits a reply leading to the passing of the order of assessment, a reopening in the absence of any new tangible material would be nothing but a change of opinion. This would not furnish the Assessing Officer with a basis for his ‘reasons to believe’ that income chargeable to tax had escaped assessment. In this case, it was clear that the reopening of the assessment was a mere change of opinion and was not justified, as there was no new information available to the Assessing Officer.

Therefore, the impugned notice was unsustainable on account of these jurisdictional errors committed by the Assessing Officer. The reopening of the assessment being a mere change of opinion was not justified, and the impugned order so passed was set aside in favor of the assessee. This case law provides an important precedent for future cases where the Assessing Officer attempts to reopen an assessment without any new tangible material. Such attempts must be scrutinized carefully and challenged when necessary to protect the rights of taxpayers.

[Tahnee Heights CHS Ltd. v. ITO (2023) 147 335 (Bom.)]

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