Facts of the Case

The petitioner challenged a notice dated 27 March 2018 issued under Section 148 of the Income-tax Act, 1961 seeking to reopen the assessment for Assessment Year 2011-12.

The petitioner contended that the income sought to be taxed had already been assessed in the previous year, Assessment Year 2010-11, and that all material facts were already available with the Assessing Officer. It was submitted that the reopening was based on the same material and therefore amounted to a change of opinion.

The reasons recorded for reopening indicated that search and seizure operations were conducted in the case of the Spaze Group, during which statements were recorded revealing that M/s JMD International was being used as a conduit for providing bogus billing and accommodation entries. Records showed payments made by M/s JMD International to the petitioner during the relevant period.

 

Issues Involved

Whether the Assessing Officer had valid “reason to believe” that income had escaped assessment.

Whether reopening was barred on the ground of change of opinion.

Whether availability of books of accounts at the time of original processing precluded reopening.

Whether reassessment is permissible where the original return was processed under Section 143(1).

 

Petitioner’s Arguments

The petitioner argued that sales advances received had already been subjected to tax in the earlier assessment year and therefore could not be taxed again. It was contended that all relevant material and explanations were available with the Assessing Officer at the time of processing the return for Assessment Year 2011-12.

It was further submitted that reopening on the basis of material already on record amounted to a mere change of opinion and was therefore invalid in law.

 

Respondent’s Arguments

The Revenue submitted that tangible material emanating from search proceedings revealed that M/s JMD International was engaged in providing bogus billing and accommodation entries and that payments were made to the petitioner during the relevant financial year.

It was contended that the original return for Assessment Year 2011-12 had only been processed under Section 143(1) and no assessment under Section 143(3) had been framed. Consequently, the doctrine of change of opinion was inapplicable.

 

Court Order / Findings

The Delhi High Court dismissed the writ petition and upheld the validity of the notice issued under Section 148. The Court held that:

The reasons recorded disclosed tangible material providing a live link to the belief that income chargeable to tax had escaped assessment.

Not all receipts from M/s JMD International were taxed in Assessment Year 2010-11, and prima facie, certain receipts pertained to the subsequent year.

Processing of a return under Section 143(1) does not amount to an assessment in the strict sense.

Where no assessment under Section 143(3) has been framed, the doctrine of change of opinion has no application.

The Court relied upon settled principles that reassessment is permissible where the original return was only processed under Section 143(1).

 

Important Clarification

The Court clarified that:

Nothing stated in the judgment shall be construed as an opinion on the merits of the reassessment to be framed.

Observations were confined solely to examining the validity of the reopening notice and the existence of “reason to believe”.

This judgment reinforces the principle that reassessment is legally sustainable where fresh tangible material exists and the original return was merely processed under Section 143(1).

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770194952_RPFOAMHOMEPLTD.VsASSISTANTCOMMISSIONEROFINCOMETAX.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.