ACIT Vs Adani Power Rajasthan Limited (Supreme Court of India)
The proceedings originated from a notice dated 21 March 2021 issued under Section 148 of the Income Tax Act, 1961 for Assessment Year (AY) 2016-17, reopening the assessment of the petitioner company. The petitioner also challenged the order dated 10 November 2021 rejecting its objections to the reopening. The petitioner had originally filed its return declaring a total loss, which was processed and subsequently scrutinized under Section 143(3). By an assessment order dated 17 December 2019, the Assessing Officer (AO) accepted the returned loss without making any additions or disallowances. After receiving the reopening notice, the petitioner filed a return under protest, sought the recorded reasons and approval under Section 151, and challenged the reassessment proceedings.
Read HC Judgment in this case: Section 148 Notice Quashed for Lack of Independent Application of Mind: Gujarat HC
Before the Gujarat High Court, the petitioner contended that the reopening had been initiated solely on the basis of an audit party objection. It argued that the statutory “reason to believe” required under Section 147 must be that of the Assessing Officer and cannot be substituted by the audit party’s opinion. The petitioner relied upon earlier decisions of the High Court and the Supreme Court. The Revenue opposed the petition, contending that it was premature, that an alternative appellate remedy was available, that the AO had independently formed his opinion, and that the notice complied with the statutory requirements. It also relied on Supreme Court decisions including Commissioner of Income-tax v. P.V.S. Beedies (P) Ltd. and Commissioner of Income-tax v. Lucas T.V.S. Ltd..
