Changepond Technologies Private Limited Vs ACIT (Madras High Court)
Madras High Court has quashed a reassessment notice and order issued to Changepond Technologies Private Limited for the Assessment Year 2017-2018. The court ruled that the reassessment proceedings, initiated under Section 148 of the Income Tax Act, 1961, were based on a mere “change of opinion” by the Assessing Officer, which is impermissible after an original assessment has been completed under Section 143(3) of the Act.
Changepond Technologies had challenged the notice dated March 29, 2021, and the subsequent order dated February 22, 2022. The company argued that its original assessment for AY 2017-18 was concluded on December 17, 2019, without any adjustments to its claims for bad debts and advances written off.
Background of the Case:
During the original assessment, the petitioner had received a notice under Section 142(1) of the Act on November 30, 2019. This notice specifically requested detailed information regarding various expenses, including:
- Bad debts of ₹1,33,21,458/- (and whether offered to income in earlier years).
- Advances written off amounting to ₹48,87,440/-, with a request for nature of advance and party-wise breakup.
- Purchase of software expenses of ₹43,83,322/-.
- Foreign travel expenses exceeding ₹10 lakhs, requiring details of name, relationship with the company, amount, and nature of business transaction.
- Nature of income of ₹4,33,99,699/-.
- Details related to Form 3CD, including payments to contractors and fees for technical services exceeding ₹10 lakhs.
- Details of exempt income and reasons for disallowing Section 14A.
- Fixed asset schedules for AY 2016-17 and 2017-18, including explanations for differences in opening and closing Written Down Value (WDV).
In response to this detailed request, Change pond Technologies had submitted a comprehensive note on December 9, 2019, providing all the requested information. Despite this, the Assessing Officer later issued the impugned notice under Section 148, citing that “on perusal of profit and loss account under the head other expenses, the assessee has claimed Rs.1,33,21,458/- towards advance written off as the expenditure claimed is not an allowable expenditure.”
