Tata Sons Limited Vs DCIT (Bombay High Court)
This is a case where the scrutiny assessment was completed and order under section 143(3) of the Act has been passed followed by a rectification order under section 154 of the Act. Therefore Petitioner’s case has been considered at two stages, (i) When the assessment order was passed after scrutiny under section 143(3) of the Act and (ii) When an order under section 154 of the Act was passed.
In this case the reasons for proposed re-opening clearly indicates that Respondent No. 1 wants to re-open only on the basis of change of opinion which, as held time and again by various Courts, can not be a ground for reopening. This is because in the assessment order dated 31st December, 2007 passed under section 143(3), the same point raised in the reasons for re-opening has been discussed and considered.
It is settled law that review in the garb of reassessment is absolutely prohibited and the Courts have consistently held that reassessment cannot be allowed in such situation of change of opinion and presence of fresh tangible material is a sine qua non for a valid re-assessment.
Petition disposed accordingly with no order as to costs.
FULL TEXT OF THE JUDGMENT/ORDER of BOMBAY HIGH COURT
1. Petitioner had filed its return of income on 31st October, 2005 for A.Y.2005-06 declaring total income of Rs. 880.66 Crores (incorrectly recorded in the reasons as Rs. 808.66 Crores). The return was processed under section 143(1) of the Income Tax Act, 1961 (the said Act) on 27th March, 2006. Subsequently, the case was selected for scrutiny and an order dated 31st December, 2007 under section 143(3) of the Act was passed assessing the income at Rs 1160.67 Crores. A rectification order was passed under section 154 of the Act on 6th May, 2009 assessing the income at Rs. 2541.34 Crores under section 115JB of the Act, as tax liability was higher. Subsequently, the assessment was reopened and an order under section 143(3) read with 147 was passed on 18th December, 2009.
2. Thereafter, Petitioner received a notice dated 31st March, 2010 under section 148 of the said Act from Respondent No. 1 alleging that he had reason to believe that Petitioner’s income chargeable to tax for A.Y. 2005-2006 has escaped assessment within the meaning of section 147 of the Act. Petitioner was later provided a copy of reasons recorded for reopening assessment on 18th May, 2010. Petitioner has attacked the notice for re-opening the assessment on various grounds including that it was dispatched by Respondent more than four years after the relevant assessment year and therefore even if the notice is dated within four years of relevant assessment order, the Court should consider it to have been reopened after four years.
3. Pardiwalla submitted that in any event Petitioner has a cast iron case and the Court will hold on merits in favour of the Petitioner, after considering the reasons recorded for re-opening.
4. We have heard Mr. Pardiwalla, for Petitioner and Mr. Arvind Pinto, for Respondents and having considered the reasons for reopening with their assistance, we are inclined to hold in favour of Petitioner and set aside the notice dated 31st March, 2010 under sec.148 of the Act impugned in this Petition. Consequently the order rejecting the objections of the Petitioner dated 29th October, 2010 which is also impugned in the Petition also will have to be set aside.
5. The entire basis of forming an opinion that there has been an escapement of assessment is that, the sale of shares of TCS Division by Petitioner was nothing but ‘business income’ and therefore the profits arising out of the sale of shares held by Petitioner in the group companies would be treated as Petitioner’s income from business, and not profits arising out of sale of investment. Therefore, according to Respdt. No. 1 he had reason to believe that a sum of Rs.22,71,25,79,374/- has escaped assessment. Break up for this figure of Rs.22,71,25,79,374/- can be found in reasons itself and it is necessary for us to re-produce the same. The same is as under:
