2024 (2) TMI 1522 - HC - Income Tax

Reassessment under Section 147 quashed for impermissible change of opinion despite full disclosure by assessee

Maruti Suzuki India Ltd. Versus Deputy Commissioner Of Income Tax.

Maruti Suzuki India Ltd. Versus Deputy Commissioner Of Income Tax. - 2025:DHC:1093 - DB 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment were:a. Whether the reassessment notice issued under Section 148 of the Income Tax Act, 1961, was barred by limitation, given that it was dispatched after the statutory deadline.b. Whether the reassessment action constituted a 'change of opinion,' which is impermissible under the law, given the full and true disclosures made by the petitioner during the original assessment.c. Whether the reassessment was justified based on new factual information that came to light in subsequent assessment years.d. Whether the Assessing Officer (AO) independently applied their mind or merely relied on a report to initiate the reassessment proceedings.2. ISSUE-WISE DETAILED ANALYSISa. Limitation of Reassessment Notice- Relevant legal framework and precedents: Section 149 of the Income Tax Act prescribes the time limits for issuing reassessment notices. The Court referenced the decision in Suman Jeet Agarwal, which clarified that the issuance of a notice is only complete upon its dispatch, not merely its generation.- Court's interpretation and reasoning: The Court found that the notice was dispatched on 01 April 2016, beyond the permissible period ending on 31 March 2016. The Court held that the reassessment action was time-barred based on the principles established in Suman Jeet Agarwal.- Conclusions: The reassessment notice was quashed as it was issued beyond the statutory limitation period.b. Change of Opinion- Relevant legal framework and precedents: The principle of 'change of opinion' bars reassessment if the AO had previously examined the issue during the original assessment. The Court referenced the Full Bench decision in CIT v. Usha International Ltd., which outlined the circumstances under which reassessment would be invalid due to a change of opinion.- Court's interpretation and reasoning: The Court found that the petitioner had made full disclosures during the original assessment, and the AO had raised and addressed relevant queries. The reassessment was deemed a change of opinion, as the AO had already formed an opinion on the issues during the original assessment.- Conclusions: The reassessment action was invalidated as it constituted a change of opinion.c. New Factual Information- Relevant legal framework and precedents: The Court considered whether new information from subsequent assessment years could justify reassessment. It referenced decisions like New Delhi Television Ltd. v. Deputy CIT, which allowed reassessment based on new information that casts doubt on previous disclosures.- Court's interpretation and reasoning: The Court found no evidence of new information that rendered the original disclosures false or misleading. The issues cited for reassessment were already known and examined during the original assessment.- Conclusions: The reassessment was not justified on the basis of new information.d. Independent Application of Mind- Relevant legal framework and precedents: The Court emphasized the necessity for the AO to independently assess the need for reassessment rather than relying solely on external reports or communications.- Court's interpretation and reasoning: The AO's decision to reopen was based solely on a communication from the ACIT without independent examination of the facts. This lack of independent application of mind rendered the reassessment invalid.- Conclusions: The reassessment was quashed due to the AO's failure to independently apply their mind.3. SIGNIFICANT HOLDINGS- 'The reassessment action is thus liable to be struck down on this short ground alone.' This conclusion was reached because the notice was issued beyond the statutory limitation period.- 'The reassessment action would not sustain.' The Court held this view because the reassessment was based on a change of opinion, which is impermissible when full and true disclosures have been made.- 'The reasons fail to demonstrate the AO having even prima facie examined whether there was any fresh information.' This finding highlighted the lack of independent assessment by the AO, further invalidating the reassessment.- The final determination was that the reassessment notice dated 31 March 2016 was quashed and set aside, as it was both time-barred and constituted a change of opinion without any new factual basis justifying its issuance.