HC Quashes I-T Bid to Reopen 2003-04 Tata Tax Assessment

The Bombay High Court has set aside a revenue department notice issued to Tata Sons Ltd back in 2010 to reopen its income-tax assessment for 2003-04, ending a decade-old case.

A division bench of Justices KR Shriram and NJ Jamdar quashed the revenue department notice, citing lack of material to suggest the company suppressed any facts.

The revenue department had on April 5, 2010, served a notice to Tata Sons under Section 148 of the Income Tax Act to the effect that the assessing officer had reason to believe that income chargeable to tax for assessment year 2003-04 has escaped assessment.

The Tata group holding company had approached high court in 2011, challenging  the notice and argued that 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.

The company also pointed out that the assessment was proposed to be reopened after six years from the end of the assessment year 2003-04.

In its 14-page order issued on February 3, the court said a bald assertion by the assessing officer that he has reason to believe that income has escaped assessment, un-substantiated by tangible material, is of no avail.

“The power is of reassessment and not review,” the bench observed in its order.

“It is thus postulated that where the primary facts necessary for assessment are fully and truly disclosed and the assessing officer took a conclusive view thereon, it is impermissible to reopen the assessment based on the premise that the said material sustain a different opinion.”

Senior advocate PJ Pardiwalla, appearing for the Tata Sons, argued that the assessing officer made no endeavor to any tangible material nor the officials claim that there was any suppression of material facts attributable to the company.

Uday Ved, partner at global tax practice group KNAV, said, “The court has observed that there are two key tests necessary for the issue of notice for reopening of income escaped for assessment. Firstly, whether income escaped assessment on account of failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. Secondly, the reasons recorded by the assessing the ambit of ‘mere change of opinion’ on the very same materials. Accordingly, the High Court quashed the notice under Section 147/148 of Income Tax Act.”

Section 148 grants an assessing officer the power to assess or reassess any taxable income. In assessment year 2003-04, Tata Sons reported declared income of Rs10.53 crore. S-ET

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