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of <h1>Court quashes Income Tax Act notice based on change of opinion, emphasizes need for tangible material</h1> <h3>Mitsubishi Electric Automotive India Pvt. Ltd. Versus Union of India And Others</h3> Mitsubishi Electric Automotive India Pvt. Ltd. Versus Union of India And Others - [2015] 377 ITR 266 (P&H) Issues:Challenge to notice under Section 148 of the Income Tax Act, 1961 for assessment year 2006-07 and subsequent order dismissing objections.Analysis:The petitioner challenged a notice issued under Section 148 of the Income Tax Act, 1961, dated 23.3.2011, stating that the income for the assessment year 2006-07 had escaped assessment. The subsequent order dismissing objections was also under challenge. The petitioner requested the reasons for initiating proceedings under Section 147, which highlighted discrepancies in the treatment of royalty payments as revenue expenditure. The notice was challenged as being based on a change of opinion, as all relevant facts were disclosed and considered throughout the assessment process.The return of income filed by the petitioner explicitly disclosed royalty payments and related details. The Transfer Pricing Officer and Assessing Officer were made aware of these payments at every stage of the assessment process. The Assessing Officer had called for specific information regarding royalty payments before passing the assessment order. The Transfer Pricing Officer's order also explicitly referred to royalty payments, indicating that the relevant authorities were well-informed about these transactions.The judgment referred to the Supreme Court's decision in Commissioner of Income Tax Vs. Kelvinator of India Ltd., emphasizing that reopening assessments based on a mere change of opinion is impermissible. The court highlighted the importance of tangible material and a live link between reasons and belief for reopening assessments post-April 1989. The court found that the impugned notice under Sections 147 and 148 was solely based on a change of opinion, which was not allowed under the law.A judgment cited by the respondents was distinguished, as it was found inapplicable to the present case where all relevant facts were disclosed and considered by the authorities throughout the assessment process. The court allowed the writ petition, quashing the notice and order in question. The court found that the relevant facts were not only disclosed but also sought and considered at every stage by the Transfer Pricing Officer and Assessing Officer, leading to the decision to quash the impugned notice and order.
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