Asian Paints Ltd. Vs ACIT (Bombay High Court)
The Bombay High Court allowed the writ petition and quashed the notice dated 31 March 2021 issued under Section 148 of the Income-tax Act, 1961, along with the order dated 7 February 2022 rejecting the assessee’s objections, holding that the reassessment proceedings for Assessment Year (AY) 2013–14 were without jurisdiction.
Read SC Judgment: SC Upholds Bar on Reopening After Four Years for No Disclosure Failure
The assessee had filed its return of income for AY 2013–14, which was selected for scrutiny. During the scrutiny assessment, the Assessing Officer (AO) issued a show cause notice calling for details of advertisement and sales promotion expenses. In response, the assessee furnished a detailed break-up, which included expenditure incurred on “Colour Idea Stores.” After examination, the AO passed an assessment order under Section 143(3) read with Section 144C(3), making certain disallowances under advertisement and sales promotion expenses but accepting the expenditure claimed under “Colour Idea Stores.”
Subsequently, a notice under Section 148 was issued on 31 March 2021 to reopen the assessment. The reasons for reopening relied on the treatment of similar “Colour Idea Store” expenditure in a later assessment year, where such expenditure was considered capital in nature. Based on this, it was alleged that an amount of about ₹17.42 crore had escaped assessment for AY 2013–14 due to failure on the part of the assessee to disclose fully and truly all material facts.
