Court Nullifies Reassessment Notice in Stock Broker's Tax Case: A Victory Against 'Change of Opinion.
06 February 2024
Income Tax >> Tax Laws
In Emkay Global Financial Services Limited v/s Assistant Commissioner of Income Tax Circle 4(1)(1), Mumbai & Others., the petitioner, engaged in stock broking, contested the issuance of a reassessment notice under Section 148 of the Income Tax Act, 1961 by Respondent No.1 for Assessment Year (AY) 2015-16. The petitioner had filed a return in 2015 declaring nil income, and an assessment under Section 143(3) was completed in December 2017, determining the income at Rs.58,96,900/-. In March 2021, the petitioner received a notice under Section 148 for reassessment. The petitioner filed objections, which were rejected in February 2022.
The key issue was that the notice was issued more than four years after the relevant assessment year, triggering the proviso to Section 147, which restricts reopening after four years unless there is a failure on the part of the assessee to fully and truly disclose material facts. The petitioner argued that the material facts were fully disclosed during the original assessment.
The reason for reopening was based on alleged errors in the loss treatment in the Profit & Loss Account, which were already examined during the original assessment. The court found this to be a case of "change of opinion" rather than a valid reason to believe income had escaped assessment. Citing precedents from the Supreme Court, the court ruled that there was no failure on the part of the petitioner to disclose primary facts. Consequently, the court quashed the notice, the order rejecting objections, and any related proceedings, thus granting relief to the petitioner. No costs were awarded.
Section 148, Income Tax Act - 1961