Case Note & Summary
The petitioner, Skol Breweries Ltd., challenged the reopening of its income tax assessment for assessment year 2004-05 by the Deputy Commissioner of Income Tax. The original assessment was completed under Section 143(3) of the Income Tax Act, 1961 on 29 December 2006. On 26 March 2009, the Assessing Officer issued a notice under Section 148 seeking to reopen the assessment, citing three reasons: (A) capital expenditure of Rs.95,917,040 debited to profit and loss account with only partial add-back; (B) liability on returnable containers of Rs.145,413,619 treated as provision not allowable; (C) addition for suppressed sales computed for one month instead of twelve months. The assessee filed objections on 30 July 2009, which were rejected on 14 December 2009. The primary legal issue was whether the reopening was based on fresh tangible material or constituted a mere change of opinion. The assessee argued that no new material had emerged after the original assessment and that the Assessing Officer was merely reviewing the same facts. The court analyzed the reasons and found that all three grounds were based on material already available during the original assessment. The court held that reopening without fresh tangible material is impermissible and amounts to a change of opinion, which is not allowed under Section 147. The court quashed the notice under Section 148 and the subsequent proceedings, allowing the writ petition.
Headnote
A) Income Tax - Reopening of Assessment - Change of Opinion - Section 147, 148 Income Tax Act, 1961 - The Assessing Officer reopened assessment based on reasons that were already considered during original assessment under Section 143(3) - Held that reopening without fresh tangible material is impermissible and amounts to change of opinion (Paras 2-6).
Issue of Consideration
Whether the reopening of assessment under Section 147 of the Income Tax Act, 1961 based on the same material considered in the original assessment under Section 143(3) is valid or constitutes a mere change of opinion.
Final Decision
The court allowed the writ petition and quashed the notice dated 26 March 2009 under Section 148 of the Income Tax Act, 1961 and the subsequent proceedings for reopening of assessment for assessment year 2004-05.
Law Points
- Reopening of assessment requires fresh tangible material
- mere change of opinion not sufficient
- Section 147 of Income Tax Act
- 1961
- Section 148 of Income Tax Act
Case Details
2010 LawText (BOM) (03) 33
Writ Petition No.2542 of 2009
Dr. D.Y. Chandrachud, J.P. Devadhar
Mr. Deepak Chopra i/b. V.V. Khemka for petitioner, Ms. Suchitra Kamble i/b. Suresh Kumar for respondent
Deputy Commissioner of Income Tax, Range 8(3)
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Nature of Litigation
Writ petition challenging reopening of income tax assessment under Section 148 of the Income Tax Act, 1961.
Remedy Sought
The petitioner sought quashing of the notice dated 26 March 2009 under Section 148 and the subsequent proceedings for reopening of assessment for assessment year 2004-05.
Filing Reason
The assessee challenged the reopening of assessment on the ground that it was based on a mere change of opinion without any fresh tangible material.
Previous Decisions
Original assessment order was passed under Section 143(3) on 29 December 2006. The Assessing Officer issued notice under Section 148 on 26 March 2009. The assessee's objections were rejected on 14 December 2009.
Issues
Whether the reopening of assessment under Section 147 of the Income Tax Act, 1961 based on the same material considered in the original assessment under Section 143(3) is valid or constitutes a mere change of opinion.
Submissions/Arguments
The assessee argued that no fresh material was relied upon by the Assessing Officer after the close of the original assessment and upon passing of the assessment order under Section 143(3).
The assessee argued that the reopening of the assessment constitutes a mere change of opinion in the absence of any tangible material.
The assessee argued that the Assessing Officer purported to exercise a power of review which is impermissible.
Ratio Decidendi
Reopening of assessment under Section 147 of the Income Tax Act, 1961 requires fresh tangible material not considered during the original assessment. Mere change of opinion on the same material is not a valid ground for reopening.
Judgment Excerpts
In this proceeding, the assessee has challenged the reopening of the assessment for assessment year 2004-05 in pursuance to a notice issued on 26th March, 2009 under Section 148 of the Income Tax Act, 1961.
On behalf of the assessee, the principal argument is that (i) No fresh material has been relied upon by the Assessing Officer after the close of the original assessment and upon passing of the assessment order under Section 143(3); (ii) The reopening of the assessment constitutes a mere change of opinion in the absence of any tangible material; (iii) The Assessing Officer has purported to exercise a power of review which is impermissible.
Procedural History
Original assessment order under Section 143(3) passed on 29 December 2006. Notice under Section 148 issued on 26 March 2009. Assessee filed objections on 30 July 2009. Objections rejected on 14 December 2009. Writ petition filed challenging the reopening.
Acts & Sections
- Income Tax Act, 1961: Section 143(3), Section 147, Section 148
