2010 (4) TMI 831 - HC - Income Tax

Reassessment - Validity of notice - successor Assessing Officer has come to form a different opinion and recorded reasons thereupon without establishing any lapse on part of the petitioner or any fresh information (2010 - TMI - 35201 - SUPREME COURT OF INDIA) successor Assessing Officer has merely recorded a different opinion in relation to an issue to which the Assessing Officer who had framed the original assessment had already applied his mind and come to a conclusion that the method of accounting employed by the petitioner was correct and was not required to be disturbed In the circumstances the notice issued under section 148 of the Act and the consequential reassessment order framed under section 144 read with section 147 of the Act are hereby quashed and set aside

Summary

Issues:
Challenge to validity of notice under section 148 of the Income-tax Act, 1961 and reassessment order for the assessment year 2005-06.

Analysis:
The petition challenged the notice dated September 24, 2009, issued under section 148 of the Income-tax Act, 1961, and the reassessment order dated December 21, 2009, for the assessment year 2005-06. The respondent authority produced the original record to establish that the successor Assessing Officer had made a noting in relation to the reasons recorded prior to the notice under section 148. The petition raised objections regarding the reassessment proceedings being based on a change of opinion without indicating the escapement of income. The respondent authority argued that the reassessment was based on an elaborate assessment order for the assessment year 2006-07. The reasons for reopening the assessment for 2005-06 were related to the method of accounting employed by the assessee. The court noted that the reasons recorded did not establish any income escapement based on fresh information. The court emphasized the difference between review and reassessment, citing the case law of CIT v. Kelvinator of India Ltd. The court concluded that the successor Assessing Officer had merely recorded a different opinion without fulfilling the prerequisites for reassessment. Consequently, the notice and reassessment order were quashed and set aside, and the petition was allowed with no costs imposed.