Case Note & Summary
The petitioner, M/s. Rabo India Finance Limited, a non-banking financial company, challenged a notice dated 28.3.2011 issued under Section 148 of the Income Tax Act, 1961 seeking to reopen the assessment for Assessment Year 2004-2005, and an order dated 27.3.2011 rejecting its objections. The petitioner had entered into business support agreements with its ultimate parent company, Rabobank International, on 1.4.2002. In the first stage, the petitioner applied under Section 195(2) of the Act to determine the rate of tax deduction at source on remittances to Rabobank. The Deputy Director of Income Tax (International Taxation) passed an order on 15.6.2004 rejecting the petitioner's contention that the remittances did not constitute income, but recorded the nature and details of the services. In the second stage, the Assessing Officer completed the original assessment for A.Y. 2004-2005 under Section 143(3) on 28.12.2006, accepting the petitioner's claim that the payments to Rabobank were not taxable in India as they were for services rendered outside India. In the third stage, during the assessment for A.Y. 2007-2008, a different Assessing Officer took a different view and disallowed similar payments. Based on this change of opinion, the Assessing Officer issued the impugned notice under Section 148 for A.Y. 2004-2005. The court held that the reopening was based solely on a mere difference of opinion, without any new material or discovery of any provision of law or judgment that had not been noticed earlier. The very material relied upon had been produced before the Assessing Officer in the original assessment and considered by him. Therefore, the notice and the order rejecting objections were quashed. The court allowed the petition and set aside the impugned notice and order.
Headnote
A) Income Tax - Reassessment - Change of Opinion - Section 147, 148 Income Tax Act, 1961 - Reopening of assessment based on mere change of opinion is impermissible - The Assessing Officer had considered the same material in original assessment and formed an opinion; subsequent reassessment based on a different view of the same material without any new tangible material is invalid (Paras 3, 10-12). B) Income Tax - Reassessment - Disclosure of Material Facts - Section 147 Income Tax Act, 1961 - Where the assessee had disclosed all material facts and the Assessing Officer had applied his mind, reopening on the ground that the officer in a later year took a different view is not permissible - The court held that the reassessment notice was based on a change of opinion and not on failure to disclose material facts (Paras 3, 10-12).
Issue of Consideration
Whether a notice under Section 148 of the Income Tax Act, 1961 for reopening an assessment can be sustained when it is based on a mere change of opinion without any new material or discovery of any provision of law or judgment that was not earlier considered.
Final Decision
The court allowed the petition and quashed the notice dated 28.3.2011 under Section 148 of the Income Tax Act, 1961 and the order dated 27.3.2011 rejecting the petitioner's objections. Rule made absolute with no order as to costs.
Law Points
- Reassessment under Section 147/148 of Income Tax Act
- 1961 cannot be based on mere change of opinion
- No new material or discovery of new provision of law required for reopening
- Assessee must disclose all material facts fully and truly
- Difference of opinion between successive Assessing Officers does not justify reopening
