If the assessment is being reopened after expiry of 4 years from the relevant assessment year, it will be time-barred unless the assessee had failed to disclose material facts that were necessary for the assessment: Bombay High Court

There must be a cogent and clear indication in the reasons supplied, that in fact there was a failure on the part of the assessee to disclose fully and truly all the material facts necessary for its assessment. Such an observation was made by the Hon’ble Bombay High Court before Hon’ble Justice K. R. SHRIRAM & Hon’ble Justice AMIT B. BORKAR in the matter of Coca-Cola India Private Limited vs  The Deputy Commissioner of Income-Tax & ors [WRIT PETITION NO.1779 OF 2006] on 26.11.2021

The facts of the case were that the petitioner is a company involved in manufacturing Non-Alcoholic beverages. On 30/11/1998, the petitioner filed the return of income which disclosed a total loss of Rs.100,80,48,931/-. On 31/3/1999 petitioner filed a revised return declaring a loss of Rs.73,83,98,203/-. On 31/12/1999 petitioner filed a second revised return declaring loss of Rs.23,23,42,821/- for the Assessment Year 1998-1999 as a result of the demerger of the petitioner’s bottling division. On 28/3/2005, after the expiry of 4 years from the relevant Assessment Year, respondent No.1 issued a notice under Section 148 of the said Act. In response to a request made by the petitioner, respondent No.1, by its communication dated 27/12/2005 provided the reasons for reopening the assessment for the Assessment Year 1998-1999. 

The Hon’ble High court observed that “We have considered the reasons for reopening and there is not even a whisper that there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of that year. Failure to disclose would render the notice issued under Section 148 being held without jurisdiction.

Finally, The Hon’ble High Court allowed the instant writ petition and quashed the impugned order.

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Judgment Reviewed by: Rohan Kumar Thakur

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