Mphasis Limited Vs JCIT (Karnataka High Court)
No Reopening on Change of Opinion: HC Upholds Full Disclosure Shield (Section 147 Proviso); Beyond Limitation: HC Quashes Second Section 148 Notice for Lack of Jurisdiction; Karnataka HC Quashes Re-assessment Beyond 4 Years — No Failure to Disclose Material Facts
Mphasis Ltd, engaged in IT services & software development, challenged reopening of its A.Y. 2012-13 assessment initiated u/s 147 r/w 148, contending it was barred by limitation & without jurisdiction. The Company’s original assessment had been completed u/s 143(3) after detailed scrutiny including transfer-pricing adjustments for marketing commission to its foreign Associated Enterprises (AEs).
Despite the AO being fully aware of the payments, a notice u/s 148 was issued on 23-03-2018 (beyond four years from end of AY 2012-13) without stating reasons. A year later, another notice dated 29-03-2019 was issued citing that payments to AEs were taxable & that the assessee had defaulted in TDS deduction.
Petitioner’s Contentions
- Reopening beyond four years violates the first proviso to Section 147, as there was no failure to disclose fully & truly all material facts.
- The entire information regarding AE-payments was part of the audited accounts, Form 3CEB & 3CD, & examined by both AO & TPO.
- The reassessment was based on a mere change of opinion & hence invalid.
- Two simultaneous notices (2018 & 2019) for same AY without withdrawal of the first are illegal.
Revenue’s Stand
