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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
M.S. Sonak, Jitendra Jain, JJ
Tata Communications Limited – Appellant
Versus
Deputy Commissioner of Income Tax-1(3)(1) – Respondent
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 of
Reassessment under Section 147 requires fresh tangible material; failure to disclose facts must be established; jurisdictional conditions were not met.
Reassessment proceedings under the Income-tax Act cannot be initiated after four years without fresh tangible material or if the subject matter is pending before the Appellate Authority.
The key legal principle established in the judgment is that the notice for reopening the assessment under Section 148 of the Income-Tax Act, 1961 must be based on fresh tangible material, and reopeni....
Reassessment under Section 147 after four years requires proof of failure to disclose material facts, which was not demonstrated in this case.
The 'reason to believe' for reassessment must be based on tangible material with a direct nexus to the formation of the belief, and reassessment cannot be made on a change of opinion.
Reopening of assessment under the Income Tax Act after four years is impermissible without failure to disclose material facts; mere change of opinion does not justify such action.
Under section 147 of the Act the proceedings for the reassessment can be initiated only if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any....
Reopening of assessment under the Income Tax Act requires tangible new material; mere change of opinion is insufficient.
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