Bombay High Court quashes tax reassessment notice against Tata Sons for financial year 2003-04

The Bombay High Court recently quashed notice issued against Tata Sons Ltd that sought to reassess the income tax for the Financial Year 2003-04 and the order rejecting their objections raised. [Tata Sons Limited v. Deputy Commissioner of Income & Ors.].Bench of Justices KR Shriram and NJ Jamadar stated that the tax authorities failed to satisfy the twin tests:There is no assertion or material to indicate that 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; andThe reasons recorded by the Assessing Officer should not fall within the ambit of “mere change of opinion” on the very same material.."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" the Bench observed..The factual matrix was as follows:Tata sons had filed return of income on November 8, 2003, declaring income of ₹10,53,46,561/-Along with return, they annexed income tax summary containing details of computation of income under each head of income. Tata sons' case was selected for scrutiny assessment and on March 21, 2006, an assessment order was passed determining a total income of ₹8,58,87,52,290/-Tata sons preferred an appeal before Commissioner of Income Tax (CIT) (Appeals), Mumbai which was dismissed. The Assessing Officer determined Tata's revised total income at ₹98,55,51,776/-.On April 5, 2010, Tata Sons was served with the reassessment notice under Section 148 of the Income Tax Act and on request by Tata, the reasons for the re-assessment were also informed by the Deputy CIT.To these reasons, Tata sons filed its objections, which were disposed off by the Deputy CIT on November 30, 2010.Both the notice and the order disposing objections were challenged by Tata sons in the present petition..Tata sons argued that assessment was proposed to be reopened beyond the period of six years from the end of assessment year 2003-04.They also pleaded that there was no reason or tangible material to form the belief that income had escaped assessment. 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..The Bench observed that:the reasons for reopening the assessment in the present case did not contain a whisper about the non-disclosure by Tata sons; orthe 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; andThe assessment was sought to be opened beyong the statutory limitation of 4 years.Finding no material to justify the formation of reason to believe that income escaped assessment and invoke powers to issue notice for reassessment, the Bench quashed and set aside the notice and order..Senior Advocate PJ Pardiwalla with Advocates Anil Wani briefed by ANS Law Associates appeared for Tata Sons.Advocate Arvind Pinto appeared for respondent authorities. .[Read Judgment]