The Bombay High Court allowed a writ petition challenging the notice issued by respondent No.1, proposing to reopen the assessment for the assessment year 2016-17 on the ground that the income eligible to tax for the said assessment year has escaped assessment.
The Court held that in absence of some tangible addition to the material at hand, a case for reassessment is not made out as the requirements under section 148 of the Income Tax Act are not met.
Brief Facts:
The petitioner is a company engaged, inter-alia, in the business of FM Radio Broadcasting. Return of income for the assessment year 2016-17 was filed under section 139(1) of the Act on 16th October 2016 declaring a total loss of Rs.7,88,83,872/-. In response to the notice, issued as a part of the limited scrutiny identifying the issue related to intangible assets for examination, the petitioner claims that it filed the relevant details.
Thereafter, notices are stated to have been issued under section 142(1) seeking certain details of the assessment, pursuant to which the same were furnished. Finally, an order of assessment dated 22.10.2018 came to be passed accepting the return of income of the petitioner which included the claim of depreciation.
A notice dated 30.03.2021 was issued by respondent No.1 invoking the provisions of section 148 of the Act seeking to reopen the assessment for the assessment year 2016-17. Objections were filed to the notice. The objections were disposed of by the order dated 25.02.2022.
Both the notice and the order have been called into question in the present petition.
Contentions of the Petitioner:
The Learned Counsel for the Petitioner contended that the issues that were brought up for reassessment had been a matter of detailed scrutiny during the assessment proceedings and the present proceeding was nothing but a clear change of opinion without there being any new tangible material based on which assessment could be reopened.
Contentions of the Respondent:
The learned Counsel of the Respondent argued that the query raised by the AO during the scrutiny assessment was only pertaining to the tax aspect of the intangible assets and that no specific query was raised regarding the depreciation claim of the license fee paid by the assessee. It is stated that in a case where the AO had not applied its mind in the original assessment proceedings to a particular issue, the reassessment proceedings must be held to be valid.
Observations of the Court
The Court observed that even though there was no specific discussion as regards to the claim of depreciation, it must be presumed that the claim was considered and only then allowed. In the present case, between the date of the order of assessment sought to be reopened and the date of forming of opinion by the Assessing Officer, nothing new has happened. Neither is there any new information received nor is a reference made to any new material on record.
The Court observed that in the absence of any tangible material, the present case is nothing but a case of change of opinion and thus does not satisfy the jurisdictional requirement under section 147 of the Act.
The decision of the Court:
The Bombay High Court, allowing the petition, set aside the impugned notice dated 30.03.2021 under section 148 of the Act and the consequent order dated 25th February 2022.
Case Title: Clear Media (India) Private Limited vs Deputy Commissioner of Income-tax & Ors.
Coram: Hon’ble Justice Dhiraj Singh Thakur and Hon’ble Justice Valmiki SA Menezes
Case no.: WRIT PETITION NO. 2031 OF 2022
Advocate for the Petitioner: Mr. Dharan V. Gandhi
Advocate for the Respondent: Mr. Charanjeet Chanderpal and Ms.Ruchi Rajput
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