ACIT Vs Ceat Limited (Supreme Court of India)
The Supreme Court of India, while dismissing the Special Leave Petition filed by the Revenue, affirmed the judgment of the Bombay High Court which had quashed a reassessment notice issued under Section 148 of the Income Tax Act, 1961, for Assessment Year 2012–13.
Read HC Judgment: Bombay HC Quashed Reopening After Four Years Due to Change of Opinion
Before the Supreme Court, it was undisputed that the reassessment notice had been issued beyond four years from the end of the relevant assessment year. Consequently, the statutory conditions applicable to reopening assessments after four years were required to be strictly satisfied. After examining the reasons recorded for reopening, the Supreme Court found that the mandatory conditions precedent for reopening beyond four years were not fulfilled. It specifically noted that the reassessment proceedings were initiated on a mere change of opinion and that there were no allegations of suppression or failure to disclose material facts by the assessee. Agreeing fully with the High Court’s reasoning, the Supreme Court held that no error had been committed in setting aside the reassessment notice and dismissed the Revenue’s appeal.
The Bombay High Court, whose decision was under challenge, had examined the reassessment notice dated 27 March 2019 and the order rejecting objections dated 31 October 2019. Since the original assessment had been completed under Section 143(3) and the reopening was initiated after four years, the proviso to Section 147 was held to be applicable. The High Court emphasized that, in such circumstances, the Revenue must demonstrate a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment.
