IT Act | Reassessment Cannot Be Used To Review Assessment When All Documents Were Earlier Disclosed: Bombay High Court
The Bombay High Court has held that reassessment proceedings under Sections 148 & 148A of the Income Tax Act, 1961 cannot be initiated to re-open issues that were already scrutinized and accepted during the original assessment, observing that a mere change of mind on the part of the Assessing Officer does not constitute reason to believe nor permit reassessment. A Division Bench...
The Bombay High Court has held that reassessment proceedings under Sections 148 & 148A of the Income Tax Act, 1961 cannot be initiated to re-open issues that were already scrutinized and accepted during the original assessment, observing that a mere change of mind on the part of the Assessing Officer does not constitute reason to believe nor permit reassessment.
A Division Bench of Justice B.P. Colabawalla and Justice Amit S. Jamsandekar, while deciding a writ petition filed by the assessee, quashed the reassessment notice under Section 148, which alleged that the assessee failed to specify the purpose of income accumulation under Section 11(2) in Form 10. The Bench stated that in the present case, all the material particulars and documents were before the Assessing Officer when the original assessment was conducted. There is no new material before the Revenue, nor are there any new facts or information to justify the reopening of the assessment.
Per Section 11(2) of the Income Tax Act, 1961 it is allowed for the Charitable Trusts to accumulate the unspent income (beyond 85%) for up to 5 years, if Form 10 is filed in time mentioning the purpose, and the funds are invested in approved modes and such income remains exempt from tax.
The Assessee, Jamsetjee Jejeebhoy Charity Fund is a charitable Trust registered under section 12A of the Act.
The assessee filed its return claiming accumulation under Section 11(2).
The case was taken up for scrutiny, during which the Assessing Officer called Form 10, the details of accumulation and utilisation over the last 10 years and Trustees' resolution authorising accumulation
Subsequently the National Faceless Assessment Centre passed an order under Section 143(3), accepting the accumulation.
However, later the Assessing Officer issued notices under Section 148A(b) (notice for reassessment) alleging that the Trust had not specified a particular purpose for accumulation in Form 10, referring to an internal audit objection.
The assessee assailing the reassessment order preferred a writ petition before the High Court.
The Bench observed that that once the requirements of Section 11(2) are fulfilled, the assessee acquires a statutory right to exclusion of accumulated income from total income, and the Assessing Officer has no discretion to deny the benefit.
Also it was observed that the reassessment is not permissible to revisit an accepted view holding that all material was already examined during the original assessment, the bench ruled that reopening amounted to review in lieu of reassessment.
The Bench stated “In the present case, we find that the order initiating the re-assessment has been based not only on a change of mind but also on the non- application of the mind.”
Accordingly, the Bench allowed the writ petition in favour of the assessee by quashing the re-assessment order.
Case Title: Sir Jamsetjee Jejeebhoy Charity Fund Vs. Income Tax, Officer (Exemption)
Case No. Writ Petition No. 4941 of 2024
Appearance of the Petitioner: Mr. J. D. Mistri, Senior Advocate, with Jeet Kamdar i/b. Mr. Atul K. Jasani
Appearance of the Respondent: Mr. Dinesh R. Gulabani