- Case
- SWAPNIL KISAN PATIL v. THE MUNICIPAL CORPORATION OF GREATER MUMBAI AND ORS (Bombay High Court, 20-03-2025)
- Law
- Income-tax Act.
Facts: Pfizer Limited, as successor of Wyeth Limited, filed an income return for AY 2009-10, which was selected for scrutiny. During assessment, details of promotional expenses were sought, and the petitioner provided submissions referencing CBDT Circular No. 5 of 2012. The Assessing Officer (AO) disallowed 1/3rd of the promotional expenses in the assessment order under Section 143(3) of the Income-tax Act, 1961. The Commissioner of Income Tax (Appeals) [CIT(A)] confirmed this disallowance. Subsequently, a notice under Section 148 was issued to reopen the assessment, citing that the entire expenditure on promotional articles should have been disallowed per CBDT Circular No. 5 of 2012, leading to under-assessment of income. The petitioner objected, arguing full disclosure and that the issue was already subject to appeal.
Procedural Posture: Pfizer Limited filed a writ petition in the High Court of Judicature at Bombay challenging the notice issued under Section 148 of the Income-tax Act, 1961, for reassessment of income for AY 2009-10. The petition was admitted, and the impugned notice was stayed pending disposal.
Issue: Was the notice issued under Section 148 of the Income-tax Act, 1961, for reassessment valid, considering the issue of promotional expenses was already examined during the original assessment proceedings, and a partial disallowance was made, and the matter was concluded by the CIT(A)? Specifically, did the petitioner fail to disclose fully and truly all material facts necessary for the assessment, satisfying the pre-condition for reopening the assessment after four years under the first proviso to Section 147 of the Act?
Holding: No, the notice issued under Section 148 is invalid and is quashed.
Reasoning: The Court reasoned that the reasons recorded for reopening the assessment admitted that the issue of promotional expenses was examined during the original assessment proceedings, and a portion was disallowed. The court stated, "If this is an admitted position as per the reasons recorded, then we fail to understand how the pre-condition of failure to disclose fully and truly all material facts necessary for the assessment can at all be satisfied." The Court also noted that the assessing officer had specifically queried the details of promotional expenses during the original assessment. Therefore, the proceedings would amount to a change of opinion and a review of the assessment order, which is not permitted under Section 147. Furthermore, the issue was already concluded by the CIT(A) before the initiation of the reassessment proceedings. The court relied on its decision in Abbot India Ltd. vs. ACIT, where similar reassessment proceedings were quashed.
