Reopening of the assessment on a mere change of opinion is impermissible in law : Bom HC

In a recent decision, Hon’ble Bombay High Court held that:

“We find similar response at item Nos.13.3, 13.4, so also 13.5. The legal position has been summarised that the capital gains earned by the assessee should be assessed as such and not as business income. Thus, each of the queries which have been raised came to be replied and, then, there is a further communication on 11th December, 2009 under which the petitioner furnished the details of profits on share credit and calculated in the manner set out in this communication. The share transactions on which the short term capital gains and long term capital gains were computed were thus available. In the assessment order and a copy of which is at annexure ‘G’ at page 52 of the paper-book, we find reference being made to the membership of the petitioner of the Stock Exchange and the gains which have been declared so also the total income. There is further reference to all the communications from the petitioner. We find that the issues and which are subject matter of the impugned notice have been examined and duly considered from paras 4.3 to 4.7 of the assessment order. The issue of disallowance u/s 40(a)(ia) of the I.T. Act has been dealt with from para 6.1 onwards. In the circumstances, we do not find as to on what basis the assessment could have been reopened. If not only the main contention and stand of the assessee has been dealt with but even the alternate contention and there is a reference to all the details which were supplied, then, there was no reason at all for reopening the assessment. We have also been shown the details in the books of account. The break-up of income is extensively referred even in the assessment order. Thus, the present one is a clear case of reopening of the assessment on a mere change of opinion and that such a course is impermissible in law is by now well settled. We do not, therefore, find that the reasons which have been recorded for reopening the assessment meet and satisfy the statutory pre-conditions. Those having not being satisfied, there is no alternative but to quash and set aside the impugned notice and the assessment order following the same.”

For complete text of judgement, click here BHARAT JAYANTILAL PATEL