Reopening Not Permissible Merely On The Basis Of Change Of Opinion: Gujarat High Court Quashes Reassessment Against Axis Bank

The Gujarat High Court has quashed the reassessment against Axis Bank and held that reopening is not permissible merely on the basis of a change of opinion.

The division bench of Justice Ashutosh Shastri and Justice J. C. Doshi has observed that the action of the department in reopening the assessment is not justified as it would be tantamount to a mere change of opinion, which is not permissible, as the conditions that have been retained under Section 147 are also not satisfied.

The petitioner, Axis Bank, is a private sector bank and limited company, and some of the shareholders are citizens of India. The petitioner bank filed its original return of income for Assessment Year 2015-16 and later a revised return of income. The return of income was processed by the respondent authority, and the case of the petitioner was selected for limited scrutiny.

The assessing officer informed the petitioner's bank that the petitioner's case has been converted from limited scrutiny into complete scrutiny. 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.

The petitioner was then served with the notice under Section 148, asking the petitioner to file a return of income for Assessment Year 2015-16. The petitioner, without prejudice to the stand that may be taken, submitted a return of income in compliance with the notice under Section 148. The return of income was sought for reasons recorded for the reopening of the assessment.

The petitioner contended that the action was unsustainable in the eye of the law since there is no fresh tangible material distinct from what was made part of the assessment proceedings and was available with the authority. Since the issuance of notice was beyond the period of 4 years, in the absence of fresh tangible material, the action was impermissible.

The court quashed the notice as well as the order against the Axis Bank, and the petition is allowed.

Case Title: Axis Bank Limited Versus Assistant Commissioner Of Income Tax [R/Special Civil Application No. 19336 Of 2021]

Case Citation: 2023 Livelaw (Guj) 78

Date: 20/04/2023

Counsel For Petitioner: B S Soparkar

Counsel For Respondent: Dev D Patel

Click Here To Read The Order