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Saturday, 14 May 2016 14:26

Notice u/s 148 - Change of Opinion is Not Permissible and Notice u/s 148 deserves to be Quashed when details Pertaining to Issue were Asked and Submitted during Course of Assessment Proceedings u/s 143(3) - Delhi High Court

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Issuance of Notice u/s 148 Issuance of Notice u/s 148

Notice u/s 148 for Reopening/Reassessment u/s 147

When the question has been asked by the A.O. and replied by the Assessee during course of Assessment Proceedings u/s 143(3), then the issue of Notice u/s 148 is bad in law since change of opinion is not permissible


1. This writ petition pertains to the assessment year 2007-08 and seeks quashing of notice dated 27.03.2014 issued by respondent under Section 148 of the Income Tax Act, 1961

2. The main challenge raised in the writ petition is that the reassessment proceedings have been initiated after a period of 4 (four) years from the end of the relevant assessment year and the precondition for such initiation that there was failure on the part of the assessee to fully and truly disclose all the material particulars necessary for the assessment is absent

3. The return of income was filed on 16.11.2007. On 15.07.2009 a detailed questionnaire was issued by the Assessing Officer during the original proceedings under Section 143(3) of the Act raising specific queries with regard to share application money

4. In response to the said query raised in the questionnaire, the assessee vide its response dated 07.08.2009 furnished the details of the share capital raised during the year. Alongwith with the response complete details of the shareholders, their addresses, PAN numbers and number of shares were furnished. In addition thereto, a confirmation letter from each of the shareholders was filed, providing the details of the shares, investment made, mode of payment and the bank through which the payment was made. In addition thereto, the acknowledgement of e-returns of each of the shareholders was also furnished

5. After the above-mentioned information was received by the Assessing Officer, the assessment was framed under Section 143(3) of the Act on 07.10.2009

6. Perusal of the questionnaire along with the response furnished and the assessment order reveals that the Assessing Officer after examining the aspect of share application money received by the assessee through the issuance of the questionnaire and notices framed the assessment under Section 143(3) on 07.10.2009

7. The returned income was accepted and no addition was made on account of the share application money

8. On 27.03.2014, the impugned notice under Section 148 of the Act has been issued

9. Assessee moved to the High Court and filed a writ petition against the issuance of Notice u.s 148

10. Honb. High Court observed that this is a change of opinion which is not permissible. Accordingly, High Court quashed the Notice u/s 148 and writ was allowed


It is clear from the above, that the present case is one of change of opinion. The questionnaire and particularly question B.1 specifically raise the issue with regard to share capital. It requires the petitioner to give a list, source, genuineness, identity of the share holders along with confirmation copies of the ledger account of the party including confirmation of the mode, date, address and acknowledgement of return, etc. from the said party along with source and relevant bank entries. The said information was provided by the assessee. After receipt of the said information, Assessing Officer did not think it fit to make an addition and, under these circumstances, no addition itself amounts to forming an opinion as has been held in Usha International Ltd.

Therefore, in our view, the present exercise of issuing the notice under Section 148 of the Act would amount to nothing but a change of opinion, which is not permissible

Cases Referred to

1. CIT vs. Usha International Ltd. (2012) 348 ITR 485 (Delhi) (FB)

2. Haryana Acrylic Manufacturing P. Ltd. Co. Vs. CIT 2009 (308) ITR 38 (Delhi)

Additional Info

Read 24051 times Last modified on Saturday, 14 May 2016 15:02

Amit is a Chartered Accountant and a part of Taxpundit's Support Team. He has experience in various industry sectors including manufacturing, power and utilities, financial services, alternative investments etc. He is a passionate blogger and keep writing articles on Income Tax for various publications.

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