Bombay HC Cancels Re-assessment Order in the Absence of Any New Information

The Bombay High Court has invalidated the reassessment order, which was made solely due to a change of opinion without presenting any substantial new evidence.

A panel of judges, including Justice K. R. Shriram and Justice N. K. Gokhale, has noted that the petitioner had provided complete and accurate information required for the assessment process. The Assessing Officer (AO) issued the initial assessment order after a thorough examination of the petitioner’s submitted materials. However, the department in question failed to provide any legally mandated reasons for reopening the assessment. Throughout the communication chain, there is no indication of what information was not disclosed.

The petitioner, who is the taxpayer, challenged a notice issued by the Deputy Commissioner of Income Tax under Section 148 of the I-T Act 1961, which aimed to reopen the assessment for the fiscal year 2015-16 (dated March 24, 2022). The petitioner sought a court order to prevent the respondents from taking any actions based on the contested orders.

The petitioner argued that they had not failed to disclose all relevant information accurately and completely. The reassessment was solely based on a change in the tax authority’s opinion, as there was no new substantial evidence presented. Even when considering the merits of the case, there was no unreported income. Additionally, the income tax notice under Section 148 was issued after four years had passed, making the first proviso to Section 147 applicable.

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The department argued that the petitioner did not provide a complete and accurate disclosure, justifying the Assessing Officer’s authority to reopen the assessment in question.

The court emphasized that it has established legal precedent that the validity of reopening an assessment can only be assessed based on the reasons cited when issuing the notice under Section 148. The department has failed to provide any documentation indicating that these reasons were shared with the petitioner. For this reason alone, the challenged assessment order should be annulled.