Bombay High Court cancels IT review notice against Tata Sons

Bombay High Court cancels IT review notice against Tata Sons

The bench cited lack of material on the part of the revenue to suggest the company suppressed any details

The Bombay High Court has quashed a notice issued by the Income Tax Returns (ITR) authorities against Tata Sons Limited that sought to reassess the tax for the Financial Year 2003-04.

The bench of Justice KR Shriram and Justice NJ Jamadar stated that the tax officials had failed to furnish the right facts.

The court observed, "The power is of reassessment and not review. The primary facts necessary for the assessment are fully and truly disclosed and the Assessing Officer (AO) 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."

Tata Sons had filed an ITR in November 2003, declaring an income of Rs.10,53,46,561. Along with that, it annexed a tax summary of computation of income.

But, in 2006, the case was selected for scrutiny and an assessment order was passed determining a total income of Rs.8,58,87,52,290. Thereafter, Tata Sons appealed before the Commissioner of Income Tax (Appeals), Mumbai.

However, the appeal was dismissed and the AO determined Tata Sons' revised total income at Rs.98,55,51,776. In April 2010, it served Tata Sons with the reassessment notice under the Income Tax Act and on request, the reasons for the re-assessment were also informed by the deputy commissioner of IT-A.

Though Tata Sons filed its objections, these were disposed off. Thus, Tata Sons challenged the notice as well as the order.

It argued that the assessment was to be reopened beyond the period of six years from the end of the assessment year 2003-04. It further pleaded that there was no substantial evidence that the income had escaped the assessment. It contended that a mere "change of opinion" had influenced the entire exercise.

The bench perceived that the reasons for reopening the assessment did not contain a whisper about the non-disclosure by Tata Sons. It stated that the IT authorities had failed to show post-assessment, the failure on the part of Tata Sons to make a true and full disclosure of all material facts. Also, the assessment was to be opened beyond the statutory limitation of four years.

Briefed by ANS Law Associates, while senior advocate PJ Pardiwalla and advocate Anil Wani, appeared for Tata Sons, the IT authorities were represented by advocate Arvind Pinto.