Case Note & Summary
The petitioner, Glaxosmithkline Pharmaceuticals Ltd., challenged a notice dated 28 March 2019 issued under Section 148 of the Income Tax Act, 1961 for the assessment year 2012-2013, and an order dated 13 November 2019 rejecting its objections to the reopening. The notice was issued after the expiry of four years from the end of the relevant assessment year, and the original assessment under Section 143(3) had already been completed. The court noted that the proviso to Section 147 applies, requiring the revenue to demonstrate that the assessee failed to disclose truly and fully all material facts necessary for assessment. Upon examining the reasons recorded for reopening, which included four heads of alleged escaped income, the court found that the petitioner had made full disclosure during the original assessment. The revenue failed to discharge its onus of showing any failure on the part of the petitioner. Consequently, the court quashed and set aside the impugned notice and order, allowing the writ petition.
Headnote
A) Income Tax - Reopening of Assessment - Section 147, 148, Income Tax Act, 1961 - Reassessment after four years - The proviso to Section 147 requires the revenue to show that the assessee failed to disclose truly and fully all material facts. In this case, the assessee had made full disclosure during the original assessment under Section 143(3). The reasons recorded for reopening did not establish any failure on the part of the assessee. Held that the notice and order rejecting objections are liable to be quashed. (Paras 2-3)
Issue of Consideration
Whether the notice under Section 148 of the Income Tax Act, 1961 issued after four years from the end of the relevant assessment year and after completion of assessment under Section 143(3) is valid when the assessee had made full disclosure of material facts.
Final Decision
The court quashed and set aside the notice dated 28 March 2019 under Section 148 and the order dated 13 November 2019 rejecting objections, allowing the writ petition.
Law Points
- Reopening of assessment after four years
- proviso to Section 147
- failure to disclose material facts fully and truly
- onus on revenue
- full disclosure during original assessment
Case Details
2022 LawText (BOM) (01) 46
WRIT PETITION NO.3553 OF 2019
K.R. SHRIRAM, N.J. JAMADAR
Mr. Nishant Thakkar i/b Mint & Confreres for Petitioner, Mr. Sham V. Walve for Respondents-Revenue
Glaxosmithkline Pharmaceuticals Ltd.
Asst./Deputy Commissioner of Income Tax Circle 77(1)(1), Principal Commissioner of Income Tax Range-7, Union of India through Secretary
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Nature of Litigation
Writ petition challenging notice under Section 148 of Income Tax Act, 1961 for reopening of assessment and order rejecting objections.
Remedy Sought
Petitioner sought quashing of notice dated 28 March 2019 and order dated 13 November 2019 rejecting objections to reopening of assessment for A.Y. 2012-2013.
Filing Reason
Petitioner impugned the reopening notice and rejection order on the ground that there was no failure to disclose material facts and the reopening was barred by proviso to Section 147.
Previous Decisions
Original assessment under Section 143(3) of the Act had been completed for A.Y. 2012-2013.
Issues
Whether the notice under Section 148 issued after four years from the end of the relevant assessment year and after completion of assessment under Section 143(3) is valid when the assessee had made full disclosure of material facts.
Submissions/Arguments
Petitioner argued that there was full disclosure of material facts during original assessment and revenue failed to show any failure to disclose.
Respondents argued that there were reasons to believe income had escaped assessment.
Ratio Decidendi
Where a notice under Section 148 is issued after four years from the end of the relevant assessment year and assessment under Section 143(3) has been completed, the proviso to Section 147 applies, requiring the revenue to show that the assessee failed to disclose truly and fully all material facts. If the assessee had made full disclosure during the original assessment, the reopening is invalid.
Judgment Excerpts
Having heard Mr. Thakkar and Mr. Walve and having considered the petition, reply etc., we are in agreement with petitioner that the notice dated 28th March 2019 alongwith order dated 13th November 2019 impugned in the petition have to be quashed and set aside.
Admittedly, this is a case where the notice under Section 148 of the Act has been issued after the expiry of 4 years from the end of the relevant assessment year and assessment under Section 143(3) of the Act has also been completed. Hence, proviso to Section 147 of the Act shall apply.
From the reasons itself as well as the documents annexed to the petition, it is quiet clear that there has been full disclosure by petitioner.
Procedural History
The petitioner filed a writ petition challenging a notice under Section 148 of the Income Tax Act, 1961 dated 28 March 2019 for reopening assessment for A.Y. 2012-2013 and an order dated 13 November 2019 rejecting objections to the reopening. The court heard the petition and allowed it, quashing the notice and order.
Acts & Sections
- Income Tax Act, 1961: Section 147, Section 148, Section 143(3)
