Reassessment under Section 147 requires fresh tangible material; failure to disclose facts must be established; jurisdictional conditions were not met.

JUDGMENT

(Per Jitendra Jain, J):-

1. Rule. The Rule is made returnable immediately at the request of and with the consent of the learned counsel for the parties.

2. This Petition challenges re-assessment notice under Section 148 of the Income-tax Act, 1961 (the Act) dated 30 March 2021 for the assessment year (AY) 2014-2015 and the re-assessment order passed pursuant thereto dated 28 March 2022.

Brief Facts :

3. The petitioner filed its return of income u/s 139(1) of the Act on 24 November 2014 which was subsequently revised on two occasions namely on 17 March 2016 and 25 March 2016 which was further modified on 29 November 2016. In the original return of income, the petitioner offered guarantee fees charged to its Associate Enterprise (AE) amounting to Rs.152.66 crore by taking 1.5% of the guarantee amount as the basis. This figure of Rs.152.66 crore was credited to the profit and loss account. However, in March 2016, the petitioner realized that they have offered guarantee fee more than what was required and therefore revised the return of income by offering Rs.34.07 crore. This was done by reducing Rs.118.59 crore in revised return of income. The net effect was that the petitioner offered Rs.34.07 crore of income as guarantee fees. However, since the accounts for the financial year 2013-14 relevant to AY 14-15 were closed, the petitioner in the account of financial year 2015-16 reversed the guarantee fee amounting to Rs.118.59 crore.

4. In the revised return of of income for AY 2014-15, the petitioner under the heading 'allowable deductions' in (xiii) reduced the guarantee fee receivable pertaining to financial year 2013-14 but booked in financial year 2015-16 amounting to Rs.118.59 crore. In the note annexed to the said revised return of income, being note No.16 read as under ;

'The company has revised the guarantee fees charged to its subsidiaries for FY 2013-14, post finalization of the books of accounts for the year. Accordingly, the guarantee fee reported above excludes an amount of Rs.118,58,58,621 which has been accounted as reversal of guarantee income int he books of FY 2015-16. For tax purpose, the reversal has been given effect to in FY 2013-14 itself.'

5. The above revised return of income was selected for scrutiny assessment and after obtaining the Transfer Pricing Officer's (the TPO) report, a draft assessment order was passed on 28 December 2017. In the draft assessment order, the TPO made a transfer pricing adjustment of Rs.187,556,48,429/- which included adjustment on account of "corporate guarantee fees" issued on behalf of AE's amounting to Rs.120,80,22,974/-. The reason for making the said addition, on account of corporate guarantee fees, was the TPO rejected the contention of the petitioner that only 0.33% should be estimated towards guarantee fees which the transfer pricing officer estimated at 1.5% of the guarantee amount. The draft order was a subject matter of objections filed before DRP u/s 144C of the Act and finally on 25 October 2018, an order under Section 143(3) read with Section 144-C(13) of the Act was passed wherein pursuant to the directions of the DRP, the corporate guarantee fees proposed by the TPO at Rs.120,80,22,974/- was confirmed. The said final assessment order dated 25 October 2018 is challenged by the petitioner by filing an appeal to the Tribunal on 14 December 2018. In the writ petition, the petitioner has specifically averred that this issue of adjustment on account of "corporate guarantee fee income" is pending before the Tribunal. The appeal filed before the Tribunal is still pending as of today.

6. Meanwhile, pending the appeal before the Tribunal, a notice under Section 148 of the Act came to be issued on 30 March 2021 for the assessment year 2014-15, calling upon the petitioner to deliver a return of income within 30 days from the service of the notice. The petitioner, vide letter dated 29 April 2021, requested the assessing officer to treat the original revised return filed in Ma