Nothing New Happened Between The Date Of Reassessment Order And The Date Of Forming The Opinion By AO: Bombay High Court Quashes Reassessment Order

The Bombay High Court has quashed the Reassessment Order and held that between the date of the order of assessment sought to be reopened and the date of the formation of an opinion by the Assessing Officer, nothing new has happened. There was no new information received, nor was there any mention of new material on file.

The division bench of Justice Dhiraj Singh Thakur and Justice Valmiki SA Menezes has observed that the Assessing Officer has simply accorded a fresh consideration and come to the conclusion that the assessee ought to have claimed the benefit of deduction under section 35ABB, which would have resulted in reducing the allowance under section 32. In the absence of any tangible material, there was nothing but a case of change of opinion, which thus does not satisfy the jurisdictional foundation under Section 147.

The petitioner/assessee is in the business of FM radio broadcasting. A notice was issued by the respondent or department invoking the provisions of Section 148 and seeking to reopen the assessment for the assessment year 2016–17.

The petitioner, while objecting to the reassessment notice, highlighted that the claim of depreciation of license fees as an intangible asset had been allowed since the assessment years 2007–08 in several scrutiny assessment proceedings. The reopening of the assessment was nothing but a "change of opinion," as there was no tangible material that would warrant the reopening of the assessment.

Under Section 147, the AO can exercise its jurisdiction to reopen an assessment when he has "reason to believe" that the income chargeable to tax had escaped assessment and in cases where the assessment sought to be reopened is beyond the period of four years from the end of the relevant assessment years. The AO has to additionally be satisfied that there was a failure on the part of the assessee to fully and truly disclose all material facts necessary for assessment.

The court has noted that even when the order of assessment did not record any explicit opinion on the aspects that were sought to be examined during reassessment proceedings, it must be presumed that they had been considered by the AO and held in favor of the assessee.

The court has held that the notice under Section 148 and the consequent order disposing of the objections raised for the reopening of the assessment are unsustainable and accordingly set aside.

Case Title: Clear Media (India) Private Limited Versus Deputy Commissioner of Income-tax

Case No. - Writ Petition No. 2031 Of 2022

Citation - 2023 LiveLaw (Bom) 29

Date: 09.01.2023

Counsel For Petitioner: Advocate Dharan V. Gandhi

Counsel For Respondent: Advocates Charanjeet Chanderpal, Ruchi Rajput

Click Here To Read The Order