A Bench of Justices NJ Namdar and KR Shriram stated that a change in opinion on the material and facts examined at the time of the first assessment cannot justify reopening the assessment.
“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 Offcer should not fall within the ambit of “mere change of opinion” on the very same material,” the Court ruled.
The Bench observed that there was no material to justify any reason to believe that income escaped assessment in this case, requiring the invocation of the powers under Section 147 of the Income Tax Act.
The notice by the Deputy Commissioner of Income Tax had sought to reopen the assessment for the assessment year 2003-04 and a subsequent order rejecting Tata’s objection to reopening of the assessment.
The factual matrix of the case was that on March 21, 2006, an assessment order was passed determining a total income of ₹858,87,52,290. Aggrieved, Tata Sons preferred an appeal against the said assessment before Commissioner of Income Tax-[A], Mumbai.
The appeal was disposed of by the CIT-[A] through an order dated March 16, 2007, after which the Assessing Officer gave effect to the CIT order and determined their revised total income at Rs 98,55,51,776.
On July 23, 2008, the Assistant Commissioner of Income Tax issued notices under Section 154 seeking to rectify the assessment order of the Assessing Officer.
On April 5, 2010, Tata Sons was served with the reassessment notice and subsequently on request the Deputy Commissioner of Income Tax furnished reasons for its action.
The petitioner then filed its objections on these reasons, and by an order dated November 30, 2010, the Deputy Commissioner of Income Tax disposed of the objections filed.
A writ petition under Article 226 was filed by Tata Sons challenging the reassessment.
Source: Barandbench
