The Bombay High Court quashed reassessment notice issued against Tata Sons seeking to reassess the Income Tax.
The petitioner is a company incorporated under the Companies Act, 1913. The petitioner is an investment holding company of Tata Group’s Companies. For the assessment year 2003-04, the petitioner filed a return of income on 28th November 2003 declaring total income. Along with the Return, the petitioner had, inter-alia, annexed the income tax summary containing details of the computation of income under each head of income, the quantum of deduction claimed under sections 10A and 80HHE as well as the income from business, gross and net income. An assessment order was passed under section 143(3) determining a total income. The respondent issued notices under section 154 seeking to rectify the assessment order dated 26th April 2007 passed by the Assessing Officer.
Advocate Pardiwalla, appearing for the petitioners, contended that the petitioner is in a position to demonstrate that the impugned notice was not dispatched on 31st March 2010, as claimed by the respondents. The petitioner has a strong case on merits and, therefore, the petitioner may not be required to solely bank upon the technical objection on the point of limitation.
He urged that from the bare perusal of the reasons recorded by the Assessing Officer, it becomes explicitly clear that there was no reason to form the belief that income has escaped assessment.
The division bench of Justice N. J. Jamadar and Justice K.R. Shriram noted that the reasons recorded for the proposed reopening are conspicuously silent on the aspect that the income escaped assessment on account of failure to make full and true disclosure of all material facts relevant for the assessment, by the assessee.
The court stated that where the primary facts necessary for assessment are fully and truly disclosed and the Assessing Officer took a conclusive view thereon, it is impermissible to reopen the assessment based on the very same material on the premise that the said material sustains a different opinion.
The court said that the existence of reason to believe that income chargeable to tax has escaped assessment is a jurisdictional condition for invoking the power under section 147 of the Income Tax Act, 1961, both within and beyond a period of four years from the end of relevant assessment year.
The court held that the impugned notice and the consequent action is legally unsustainable as the Revenue fails to satisfy the twin tests. Firstly, there is no assertion, much less material to indicate, that the income escaped assessment on account of failure on the part of the petitioner to disclose fully and truly all material facts necessary for the assessment, and, secondly, the reasons recorded by the Assessing Officer should not fall within the ambit of “mere change of opinion” on the very same material.
The court quashed and set aside the impugned notice issued by the Respondent under Section 148 of the said Act to reopen the assessment for the assessment year 2003-04 and the order rejecting the objections of the Petitioner to the issuance of the notice under section 148 of the said Act and said that there was no material to justify the formation of a reason to believe that income escaped assessment and invoke the power under section 147 of the Act, 1961.
Case title: Tata Sons Limited v/s Deputy Commissioner of Income Tax and Ors.
Citation: WRIT PETITION NO. 683 OF 2012