The judgment established the importance of tangible material and the prohibition of a mere change of opinion in the exercise of power under section 147 of the Income Tax Act.

JUDGMENT

N. J. Jamadar, J. - By this petition under Article 226 of the Constitution of India, the petitioner assails the notice dated 31st March 2010 under section 148 of the Income Tax Act, 1961 ('the Act, 1961'), issued by the respondent No. 1-Deputy Commissioner of Income Tax, Range 2(3), Mumbai seeking to reopen the assessment for the assessment year 2003-04, and the order dated 30th November 2010 passed by respondent No.1 rejecting the petitioner's objection to reopening of the assessment for the assessment year 2003-04.

2. The background facts, leading to this petition, can be stated in brief as under :

2.1) The petitioner is a company incorporated under the Companies Act, 1913. The petitioner is an investment holding company of Tata Group's Companies. For the assessment year 2003-04, the petitioner filed return of income on 28th November 2003 declaring total income of Rs.10,53,46,561/-. Along with the Return, the petitioner had, inter-alia, annexed the income tax summary containing details of the computation of income under each head of income, the quantum of deduction claimed under sections 10A and 80HHE as well as the income from business, gross and net income. The petitioner had also annexed Audit Report, Director's Report and the Audited Accounts for the year ended 31st March 2003.

2.2) The petitioner's case was selected for scrutiny assessment. Multiple notices and questionnaires were served on the petitioner on a variety of issues, including the deductions claimed under section 10A, 80HHE and 80G, dis-allowance of interest etc. The petitioner claimed to have given explanations and furnished documents in support thereof.

2.3) On 21st March 2006, an assessment order was passed under section 143(3) determining a total income of Rs.858,87,52,290/-.

2.4) Being aggrieved, the petitioner preferred an appeal against the said assessment before Commissioner of Income Tax (Appeals)-XXXIII, Mumbai ('CIT-[A]'). The said appeal was disposed of by CIT-[A] by an order dated 16th March 2007.

2.5) The Assessing Officer-respondent No.2 passed an order in conformity with, and giving effect to, the order of CIT [A] and determined the revised total income of the petitioner at Rs.98,55,51,776/-.

2.6) On 23rd July 2008, the respondent No.2 issued notices under section 154 seeking to rectify the assessment order dated 26th April 2007 passed by the Assessing Officer. In the meanwhile, on 5th April 2010, the petitioner was served with the notice under section 148 of the Act issued by respondent No.1, purportedly dated 31st March 2010, to the effect that the Assessing Officer had reason to believe that income chargeable to tax for assessment year 2003-04 has escaped assessment within the meaning of section 147 of the Act, 1961, and, thus, it was proposed to reopen the assessment. Upon request being made, the respondent No.1 furnished reasons recorded for reopening the assessment.

2.7) The petitioner filed its objections on the reasons for the proposed reopening. By the impugned order dated 30th November 2010, the respondent No.1 disposed the objections filed by the petitioner.

3. The petitioner has thus invoked the writ jurisdiction of this Court. The principal grounds of challenge are, firstly, the assessment is proposed to be reopened beyond the period of six years from the end of assessment year 2003-04. Though, the notice under section 148 purports to have been issued on 31st March 2010, yet it was dispatched on 3rd April 2010. On this count alone, the impugned notice and the consequent action deserve to be quashed and set aside. Secondly, there was no tangible material which would justify the recourse to the provisions contained in section 147 of the Act, 1961. Thirdly, there is no allegation much less cogent material to demonstrate that the income escaped assessment on account of suppression of material facts on the part of the petitioner. Fourthly, the reasons recorded by the Assessing Officer ex-facie indicate that they are not sufficient to f