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The Bombay High Court recently quashed a notice issued against Tata Sons Ltd for reopening its Income Tax (IT) assessment for the Financial Year 2003-04.

A division bench of Justices K R Shriram and N J Jamadar quashed the IT notice and observed,

“There is no assertion, much less material to indicate, that the income escaped assessment on account of failure on the part of the petitioner to disclose fully and truly all material facts necessary for the assessment.”

The bench further observed that, “The reasons recorded by the Assessing Officer should not fall within the ambit of ‘mere change of opinion’ on the very same material.”

On November 8, 2003, Tata Sons filed IT returns declaring income of Rs 10,53,46,561. It had annexed an income tax summary containing details of computation of income under each head of income. However, Tata Sons' returns were selected for scrutiny assessment and on March 21, 2006, an assessment order was passed determining a total income of Rs 858,87,52,290.

Thereafter, Tata Sons filed an appeal before the Commissioner of Income Tax (CIT) (Appeals) at Mumbai which was dismissed. The Assessing Officer then determined Tata's revised total income at Rs 98,55,51,776.

Consequently, the reassessment notice was served to Tata Sons on April 5, 2010, to which it raised an objection before the CIT. However, the same were dismissed.

Tata Sons then approached the High Court challenging the IT notice. The plea contended that the assessment was proposed to be reopened beyond the period of 6 years from the end of assessment year 2003-04.

The entire exercise was influenced by a mere "change of opinion" on the same material as the reasons recorded by the Assessing Officer indicated that they are not sufficient to form the belief that the income escaped assessment, claimed Tata Sons.

Sr. Adv. P J Pardiwalla and Adv. Anil Wani instructed by ANS Law Associates argued on behalf of Tata Sons.

It made Deputy Commissioner of IT, Assistant Commissioner of IT, CIT and Union of India as respondents. They were represented by Adv. Arvind Pinto.

Dismissing the IT notice, the High Court noted that the assessment was sought to be opened beyond the statutory limitation of 4 years.

The bench also observed that the reasons for reopening the assessment in the present case did not contain a whisper about the non-disclosure by Tata Sons.

Also, the authorities failed to show post assessment, the failure on the part of Tata Sons to make a true and full disclosure of all material facts.

“The power is of reassessment and not review...where the primary facts necessary for assessment are fully and truly disclosed and the Assessing Officer took a conclusive view, it is impermissible to reopen the assessment based on the very same material on the premise that the said material sustains a different opinion,” added the bench.

Cause Title: Tata Sons Limited vs Deputy Commissioner of Income & Ors.