TaxTMI 
TaxTMI 
2025 (8) TMI 1179
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.... No. 3511/Mum/2025 for the A.Y. 2014-15 has been taken up as the lead case wherein our observations, deliberations and adjudication shall apply mutatis mutandis to the other appeal i.e., ITA No. 3512/Mum/2025 for the A.Y. 2015-16. ITA No. 3511/Mum/2025 (A.Y. 2014-15) 4. At the outset, Shri Rajan Vora, Authorized Representative of the assessee (in short 'ld. AR') briefed the background of the case stating that the appellant-company is an Indian Multinational Automotive Manufacturing Company producing passenger cars, trucks, vans, coaches, buses, luxury cars, sports cars and construction equipment. For the year under consideration i.e., AY 2014-15, the appellant-company had filed its return of income on 28.11.2014 declaring loss of Rs. 5567.15 crores under the normal provisions of Income-tax Act and loss of Rs. 950.44 crores u/s 115JB of the Act. There after appellant revised its return on 30.03.2016 declaring loss of Rs. 5567.15 crores under the normal provisions of Income-tax Act and loss of Rs. 14.58 crores u/s 115JB of the Act. Subsequently, appellant's case was selected for scrutiny under CASS vide notice u/s 143(2) of the Act dated 28.08.2015. The scrutiny proceedings cam....
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....r law. ii. The genesis of reopening was the same material available with the AO on assessment records and no new tangible material or fact brought on record. iii. The reopening was beyond a period of 4 years from the end of relevant assessment year without any failure on the part of assessee to disclose facts truly and fully as required for the assessment." 9. While raising the aforesaid contention, the ld. AR furnished before us a written synopsis along with jurisprudence relied upon to support that aforesaid contentions. The written submission furnished before us is culled out hereunder, for the sake of interpretation and to check the applicability of case laws relied upon in the facts of present matter: "Ground of Appeal Nos. 2 to 5: Invalidity of impugned proceedings under section 147 of the Act: 13. At the outset, the relevant extracts of the reasons for re-opening (enclosed at page nos. 304 to 306) are reproduced herewith for ready reference: "The assessee filed return of income on 28.11.2014 declaring current year loss of Rs. 5567,14,72,712/- under the normal provisions of the Act and loss of Rs. 9.50, 43,82, 744/- u/s 115JB of....
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....sment for AY 2014-15." A. Reopening of assessment for the captioned AY, basis a mere change in opinion is not permissible and hence reopening is invalid and bad in law. 14. In this regard, the Appellant wishes to submit that deduction claimed by it under section 32AC has been properly disclosed in the computation of income (enclosed at page nos. 111 to 124 of the factual paperbook) as well as Tax Audit Report (enclosed at page nos. 178 to 183 of the factual paperbook). 15. Further, during the course of the assessment proceedings, the Appellant has submitted the working of investment in new plant & machinery eligible for deduction under section 32AC of the Act duly certified by the tax auditor vide its submission dated 21 November 2017 (enclosed at page nos. 194 to 198 of the factual paperbook). Vide submission dated 28 November 2017 (enclosed at page nos. 199 to 285 of the factual paperbook) and in response to point no. 7 of order sheet entry dated 20 October 2017, the appellant submitted details of additions made under the block Plant and Machinery along with sample copies of asset capitalization documents. 16. Subsequently, in response to point....
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....on which was under consideration for the respondents. The entire transaction has been considered by the Assessing Officer and has culminated into the order under section 143(3) of the income-tax Act dated 24th December 2018. As apparent from the reasons there were no new tangible material in the hands of the Assessing Officer. Once the assessment is concluded, it is deemed to have been concluded with application of mind by the Assessing Officer from all perspectives legal and factual. In this regard it would be fruitful to rely upon the Full Bench decision of the Delhi High Court in the case of CIT v. Kelvinator of India Ltd [2002] 123 Taxman 433/256 ITR 1 of India Ltd 16 which held that: ................................................ The reopening of the assessment based on a different method of computation or application of the section is nothing else but a change of opinion which is impermissible in law. A similar situation was dealt with in the case of Jindal Photo Films Ltd. (supra) where the Court, in the background of section 147 of the Act, observed: ".................... all that the Income-tax Officer has said is that he was not right in allow....
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....at, it is misconstrued and misapplied, on the other hand, the judgments relied upon by the petitioner are relevant and support the contentions' so raised by the petitioner. * Department's SLP has been dismissed by the Hon'ble SC in 461 ITR 360 dated 11 December 2023 (enclosed at page nos. 407 to 408 of the legal paperbook). * Emkay Global Financial Services Ltd. [(2024) 465 ITR 763 dated 6 February 2024 (Bombay HC)] (enclosed at page nos. 409 to 413 of the legal paperbook) Department's SLP dismissed by SC in 482 ITR 286 dated 10 February 2025 (enclosed at page nos. 414 to 415 of the legal paperbook). * State Bank of India ((2019) 418 ITR 485 dated 17 January 2019 (Bombay HC)] (enclosed at page nos. 416 to 423 of the legal paperbook) Department's SLP dismissed by SC in 447 ITR 368 dated 4 August 2022 (enclosed at page nos. 424 to 425 of the legal paperbook) * Bharat Petroleum Corporation Ltd [(2025) 176 taxmann.com 103 dated 3 July 2025 (Bombay HC)] (enclosed at page nos. 426 to 443 of the legal paperbook) * Tata Sons Ltd. ((2022) 443 ITR 282 (Bombay HC) dated 03 February 2022] (enclosed at page nos. 444 to 449 of the ....
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.... 24. It is humbly submitted that it is a well settled judicial principle that the true test of income chargeable to tax escaping assessment is whether there exists fresh "tangible material" on whose basis an appropriate conclusion can be reached. In the absence of such fresh material, the reassessment proceedings would be invalid. Further, the word 'tangible' has been used before material, which means not all and every information can lead to reopening of assessment but it has to be a tangible material, which is so relevant that it leads to information by which the assessing officer can satisfy that there is income which has escaped assessment 25. Reliance in this regard is placed on the following decisions: * Coca-Cola Export Corporation [(1990) 231 ITR 200 (SC)] wherein it held that "there should be some fresh information and not mere reappraisal of evidence on record to justify jurisdiction for re-assessment * Kelvinator India Limited [(320 ITR 561) (SC)] (enclosed at page nos. 394 to 396 of the legal paperbook) * TechSpan India Pvt Ltd [Civil Appeal No. 2732/ 2007 dated 24 April 2018 (SC)) * New Delhi Television Ltd. [(2020)....
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.... and deals only with the question whether primary material facts not disclosed could still be said to be constructively disclosed on the ground that with due diligence the Income-tax Officer could have discovered them from the facts actually disclosed. The Explanation has not the effect of enlarging the section, by casting a duty on the assessee to disclose "inferences" to draw the proper inferences being the duty imposed on the Income-tax Officer. The Court held that the duty of the assessee is to disclose fully and truly all primary relevant facts and it does extend beyond that." * Department's SLP dismissed by Hon'ble SC in 482 ITR 286 dated 10 February 2025 (SC) (enclosed at page nos. 414 to 415 of the legal paperbook). * Imperial Consultants and Securities Ltd. [(2025) 303 Taxman 263 dated 20 December 2024 (Bombay HC)] (enclosed at page nos. 571 to 587 of the legal paperbook): "44. Adverting to the principles of law as the aforesaid decisions lay down to the facts of the present case, we may observe that the Assessing Officer in issuing the impugned notice under Section 148 of the IT At has clearly acted without jurisdiction. This firstly for....
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....uld certainly not recognize * 45. Now coming to Mr. Suresh Kumar's contentions, we do not find ourselves in agreement with Mr. Suresh Kumar relying on "Explanation 1 below Section 147. We fail to understand as to how Explanation 1 would in any manner dilute and/or dispense with the rigors of the specific compliance of the first proviso, when the assessment is being reopened after a period of four years. Explanation 1 merely explains that production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the preceding proviso. We may observe that this is certainly not a case where on the materials which are already produced before the Assessing Officer, the Assessing Officer has gathered or discovered further material evidence so as to construe that there was failure on the part of the assessee to make a disclosure of such materials. Moreover, there is no further tangible material which has been gathered on due diligence from the existing material and hence it is quite futile for the respondents to ta....
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....s. Therefore, there is no live linkage of material (if at all any) with the impugned transaction on which the learned assessing officer has sought to reopen the assessment and hence reopening proceedings initiated should be quashed. 31. It is our respectful submission that the validity of the reopening needs to be satisfied on the basis of reasons recorded. Once the assessing officer has not given any reference of what additional material he has received and how that material is relevant for addition of income under income escaping assessment (e. live linkage), entire re-assessment proceedings is bad in law 32. Reliance in this regard is placed on the following decisions * Lakhmani Mewal Das (103 ITR 437 (SC)] * Shodiman Investments Pvt Ltd [ITA No. 1297 of 2015 dated 16 April 2018 (Bombay HC)] Harish Gangji Dedhiya ((2022) 443 ITR 273 (Bombay HC) dated 29 March 2022 C. Reassessment proceedings without any failure on part of the Appellant to disclose facts fully and truly are bad in law and ought to be quashed. 33. The Appellant humbly submits that from the reasons recorded it cannot be established that what information/details ....
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....dvertisement and sales promotion expenses which details were furnished by the petitioner vide its response dated 17th October 2016. It can also be seen that the AO had disallowed some of the expenses which had been reflected in the break-up under the head "details of advertisement and sales promotion expenses while passing the final order of assessment, which reflects that the AO had applied its mind to the appellant's claim while passing the order under section 143(3) of the Act. Moreover, the reasons do not disclose as to what material or fact was not disclosed by the assessee it, therefore, clear that there was, in fact, a complete disclosure of all the primary material facts on the part of the petitioner and it cannot be said that there was any failure on the part of the petitioner to disclose fully and truly facts which were material and necessary for assessment." * Department's SLP has been dismissed by the Hon'ble SC in 296 Taxman 74 dated 9 October 2023 (enclosed at page nos. 592 to 593 of the legal paperbook). * L&T Ltd. [113 taxmann.com 47 (Bombay HC)] (enclosed at page nos. 594 to 595 of the legal paperbook) - Department's SLP has been d....
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.... held that "The use of the words "reason to believe in section 147 has to be interpreted schematically as the liberal interpretation of the word would have the consequence of conferring arbitrary powers on the assessing officer who may even initiate such reassessment proceedings merely on his change of opinion on the basis of some facts and circumstances which has already been considered by him during the original assessment proceedings. Such could not be the intention of the legislature. The said judgment further held that "section 147 of the IT Act does not allow the reassessment of an income merely because of the fact that the assessing officer has a change of opinion with regard to the interpretation of law differently on the facts that were well within his knowledge even at the time of assessment. Doing so would have the effect of giving the assessing officer the power of review and section 147 confers the power to reassess and not the power to review." * Department's SLP has been dismissed by the Hon'ble SC in 277 Taxman 198 dated 4 January 2021 (enclosed at page nos. 606 to 607 of the legal paperbook). * Gateway Leasing (P.) Ltd. ((2020) 426 ITR 228 dated 1....
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.... the ld. AO on the issue, to which the assessee has furnished all the relevant information from time to time, then only Ld A.O. accepted the contention of the assessee and have decided to not offer any adverse comment in the assessment order regarding the admissibility of assessee's claim towards section 32AC of the Act. 12. Based on aforesaid submissions, the ld. AR argued further that the material, which was relied upon by the Ld AO to form the belief for recording the reasons, was very much on the assessment records, wherein at the initiation itself, the ld. AO has mentioned that "on perusal of the record, it was observed.........." and thereafter reiterated the facts which were there on the assessment records. Ld AR submitted that, once a plausible view has been adopted by the AO and the assessee of claim u/s 32AC was allowed, based on material and facts on record, reopening of assessment of income escaping on the basis of same facts and material on record, is nothing but merely a 'change of opinion' which is not permissible under the provisions of section 147, and according to the settled principle of law by Hon'ble Courts in the judgments referred to (supra). 13. The ld....
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....at, as the assessee during assessment proceedings have furnished all the necessary information which were sought by the AO at different stages of the assessment and specific query qua the assessee's claim u/s 32AC was also satisfactory complied with, therefore, the reopening in present case to deny the same claim, would constitute merely a change of opinion based on material and facts on record without any new tangible material on facts brought on record. Further, the ld. AO have not brought on record any failure on the part of assessee to disclose fully and truly all material facts necessary for the assessment, which is necessary for reopening beyond a period of 4 years after the expiry of assessment year. The ld. AO merely mentioned that the assessee failed to furnish necessary details but no specific description of such failure has been recorded in the reasons to believe. In view of such submissions, it was the prayer by ld. AR that the initiation of reopening assessment and the notices issued u/s 148 itself was bad in law, being not in conformity of the provisions of the Act and, therefore, the entire proceedings of reopening thereafter vitiate and does not have any legal stand....
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..... Proceedings cannot be based on mere change of opinion. In the following cases, proceedings under section 148 of the Act have been quashed after referring the decisions in case of Rajesh Jhaveri Stock Brokers (P) Ltd ((2007) 291 ITR 500 (SC)). Praful Chunilal Patel (1999) 236 ITR 832 (Gujarat HC)), Raymond Woollen Mills Ltd. (1999) 236 ITR 34 (SC)) and Murrah Livestock Agency (2004) 91 ITD 198 (Patna ITAT)) * State Bank of India ((2019) 418 ITR 485 dated 17 January 2019 (Bombay HC)] (enclosed at page nos. 416 to 423 of the legal paperbook) Department's SL.P dismissed by SC in 447 ITR 368 dated 4 August 2022 (enclosed at page nos. 424 to 425 of the legal paperbook) * HDFC Bank Ltd. ((2024) 162 taxmann.com 390 dated 17 April 2024 (Bombay HC) * TMF Holdings Limited [ITA No. 2983/Mum./2025 dated 18 July 2025 (Mumbai ITAT)] (enclosed at page. nos. 475 to 505 of the legal paperbook) * Project India [(2007) 110 TTJ 142 dated 31 August 2006 (Indore ITAT) 2 Praful Chunilal Patel (1999) 236 ITR 632 (Gujarat HC) 3 Navnidhi Dyeing and Printing Mills P. Ltd (2021) 434 ITR 334 (Gujarat HC) 4 Murrah Livestock Agency (2004) 91 ITD 19....
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....ruly of material fact required for original assessment, which is a pre-condition for reopening beyond 4 years, as per first proviso to section 147 of the Act; and (iii) whether there was any new fact or material surfaced or brought on record by the revenue which allows them to invoke the provisions of section 147." 23. Apropos, the first issue that whether the reopening was merely a change of opinion, we find substance in the contentions and submissions placed by the ld. AR, and rightly so for the reason that on perusal of 'reasons to believe' recorded by ld. AO, which are started with the phrase that "subsequently on perusal of records, it was observed from the computation of total income that the assessee claimed deduction u/s 32AC". Further, the facts and figures which are referred to in the reason to believe by the ld. AO, are evidently originating from the various information/ documents, which were submitted by the assessee in compliance to queries raised by the AO during the original assessment proceedings u/s 143(3) of the Act, the same were brought to our knowledge by the ld. AR by drawing our attention to the respective documents (referred to supra). 24. In ....