The Gujarat High Court ruled that no re-opening is permissible merely on the basis of change of opinion.
Facts
The petitioner is a private sector Bank and limited company and some of the shareholders are the citizens of India. The petitioner Bank filed its original return of income for Assessment Year 2015-16 and later on a revised return of income was also submitted inter alia declaring the total income of Rs.112,53,09,30,950/-.
This return of income was processed by the respondent authority and the case of the petitioner was selected for limited scrutiny. It is the case of the petitioner that thereafter the assessing officer informed the petitioner Bank that the case of the petitioner has been converted from limited scrutiny into complete scrutiny whereby the assessing officer has assumed unrestricted power to verify or deal with any issue for Assessment Year 2015-16 and later on, the notice came to be issued under Section 142 (1) of the Income Tax Act calling upon the petitioner to tender specific details relating to the issue of bad debt and NPA in view of Section 36(1) (vii) and Section 36(1) (viia) of the Act.
Submissions
Senior Advocate Bandish S. Soparkar, appearing for the petitioner, urged that the reasons recorded for reopening of the assessment of the year 2015-16 is nothing but an impermissible act on the part of the respondent authority in as much as the very issue has been gone into at the time of the assessment and he has chosen to finalize the assessment without any addition. It is the reopening beyond the period of four years where there is nothing to indicate that the petitioner has not disclosed fully and truly all material facts.
He submitted that apparently the action is unsustainable in the eye of law since there is no fresh tangible material distinct from what was made part of the assessment proceedings which was available with the authority and since issuance of impugned notice is beyond the period of four years, in the absence of fresh tangible material, the action is impermissible.
Advocate Dev D. Patel, appearing for the respondent authority, submitted that that scope of scrutiny is very very limited and it is always open for the authority to reopen the assessment and as such there is no illegality in the impugned order nor in issuance of notice under Section 148 of the Act.
Decision
The division bench of Justice Ashutosh Shastri and Justice J. C. Doshi said that the reason which has been recorded to re-open that there is a failure on the part of assessee to disclose fully and truly all necessary fact during the assessment proceedings is not possible to be accepted.
The bench opined that no re-opening is permissible merely on the basis of change of opinion.
The bench viewed that the assessee for the Assessment Year 1996 – 1997 had claimed depreciation as deduction on non-existent machinery and the same was allowed under Section 32, read with Section 43(6) of the Act and later on it was found that a bogus claim was generated and the mistake was discovered and thereby Section 148 proceedings were initiated and closely on perusal of paragraph 10 of the judgment of Gruh Finance Ltd., it was found that it was upon information, the department noticed that such depreciation was claimed which was not available to the assessee whereas here there was no fresh information, there was no tangible material and the re-opening is sought on the basis of assessment record itself and as such ex facie this judgment is not of any assistance to the revenue.
Case title: Axis Bank Limited V/S Assistant Commissioner Of Income Tax
Citation: R/Special Civil Application No. 19336 Of 2021
