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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
M.S. Sonakitendra Jain, JJ
Indusind Media & Communications Ltd. - Appellant
Versus
Assistant Commissioner Of Income Tax - Respondent
WRIT PETITION NO. 649 OF 2013
Decided On : 20-02-2025
(A) Income Tax Act, 1961 - Section 148 - Reassessment proceedings - Notice issued for reopening assessment for AY 2007-08 challenged - Petitioner claimed deductions against share premium due to amalgamation - Court held that reassessment based on change of opinion is impermissible - No double deduction established - Notice quashed. (Paras 12, 18, 22)
(B) Reassessment - Scope - Reassessment cannot be initiated if the issue was examined during the original assessment proceedings - Change of opinion not permissible under the Act. (Paras 12, 19)
Facts of the case:
The petitioner filed a return of income for AY 2007-08, revised it, and claimed deductions related to amalgamation. The assessment was completed with no income assessed, but a notice under Section 148 was issued later citing discrepancies.
Findings of Court:
The court found that the reassessment was based on previously examined issues and thus constituted a change of opinion, rendering the notice invalid.
Issues: The main issues were whether the reassessment was valid given that the matters had been previously addressed and whether there was a double deduction.
Ratio Decidendi: The court ruled that reopening assessments based on previously examined issues is impermissible, reaffirming that the absence of rebuttal to factual claims made by the petitioner indicates acceptance of those claims.
Result: Notice quashed and set aside.
| Table of Content |
|---|
| 1. petitioner filed return of income (Para 1) |
| 2. petitioner claimed deductions (Para 2 , 3) |
| 3. assessment order passed (Para 4) |
| 4. petitioner filed objections (Para 6 , 7 , 8 , 9 , 10) |
| 5. court discussed reassessment (Para 11) |
| 6. reassessment cannot be initiated (Para 12) |
| 7. court noted previous submissions (Para 13 , 14) |
| 8. reopening cannot be sustained (Para 15 , 16 , 17 , 18 , 19 , 20 , 21) |
| 9. notice quashed and set aside (Para 22 , 23) |
JUDGMENT :
Jitendra Jain, J.
1. This petition, under Article 226 of the Constitution of India, challenges a notice under Section 148 of the Income Tax Act, 1961 (‘the Act’) dated 30 March 2012 for assessment year 2007-08. Rule and interim relief were granted on 23 June 2014.
Brief Facts : -
2. The petitioner filed its return of income on 29 October 2007, which return was revised on 31 March 2009. In the revised computation of income, the petitioner claimed as deduction an amount of Rs.69,88,37,464/- being Inventories, Sundry Debtors, Loans & Advances and Cost of Set Top Boxes written off against the Share Premium pursuant to amalgamation scheme approved by the High Court. The case of the petitioner was selected for scrutiny assessment.
3. On 7 December 2009, the petitioner filed written submissions wherein it had mentioned various write off against the share premium account in accordance with the amalgamation order passed by this Court on 9 February 2007. The petitioner also gave its submissions on business loss & bad debts in respect of the Inventories, Sundry Debtors, Loans & Advances amounting to Rs.9,05,12,555/-, Rs.41,00,00,000/- and Rs. 12,99,12,471/- respectively. The petitioner in paragraph 20 of the said letter also gave its submission with respect to a claim of Rs.6,84,12,438/- on account of write off of Set Top Boxes.
4. On 30 December 2009, an assessment order under Section 143 (3) of the Act was passed. In the said assessment order, an amount of Rs.1,00,41,557/- was disallowed on account of bad debts. The income assessed was Nil after setting off unabsorbed business losses and depreciation.
5. On 30 March 2012, the impugned notice under Section 148 of the Act was issued to the petitioner. The petitioner was served with the reasons for reopening assessment vide letter dated 22 May 2012 and the reasons read as under : -
“On perusal of assessment records relating to A.Y.2007-08, following discrepancy has been noted:
“The assessee company in the business of cable operation and film distribution. The assessee filed original return of income in October 2007 and subsequently revised return of income was filed in March 2009 declaring total income at rupees Nil to correct mistakes in the capital gains working, disallowance under section 14A, rectification for claim of set-off of unabsorbed losses and application under section 72A.The assessment for Assessment Year to 2007-08 was subsequently completed after scrutiny in December 2009 assessing total income at rupees Nil.
It is seen from records that a scheme of amalgamation between Network Entertainment Ltd and In2 Cable (India) Limited and Industry Media and Communications Ltd. was submitted before Honourable Bombay High Court which was approved by High Court vide order dated 09.02.2007 effective from 01.04.2006. As per scheme the transferee company shall utilise by way of adjustment a sum of Rs. 85 crores in the of the aggregate of the balance standing in the Securities Premium Account of the Transferee Company as on 31st March 2006 for utilising by way of adjustment of :
a. Goodwill at Rs. 14 course
b. Inventory-of Rs. 14 crore
c. Receivable of Rs. 41 crore
d. Advances at Rs. 15 crores
e. Investments at Rs. 1 crore
The application and consequential reduction of Securities Premium Account is an integral part of the Scheme itself. The utilisation and consequential reduction of the Security Premium Account does not involve either diminution of liability in respect of unpaid share capital or payment to any shareholders. Accordingly as per approved
Reassessment under Section 148 is impermissible if the issues were previously examined, constituting a change of opinion.
Reassessment under Section 148 of the Income Tax Act is impermissible if the issues were previously examined during the original assessment, as it constitutes a change of opinion.
Assessee’s objections raised against the reopening proceedings are not acceptable as the case warrants scrutiny on the same lines. Accordingly, the objections so raised are hereby disposed off accord....
Reopening of assessment under Section 147 of the Income Tax Act is justified when there is failure to disclose material facts, even beyond the four-year limit.
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.
Reopening of assessment under Section 148 is valid based on audit objections if the taxpayer fails to provide timely responses or necessary documentation.
Point of Law : Sufficiency of the evidence or material is not open to scrutiny by the Court but the existence of the belief is the sine qua non for a valid exercise of power.
Reassessment under Income Tax Act is impermissible on issues already addressed in a completed assessment, as it constitutes a change of opinion without new material evidence.
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