In a recent ruling, the Delhi High Court quashed Rs. 2,000 crore income tax noticeby the Income Tax Department against Maruti Suzuki India Ltd. (the petitioner), holding that the reassessment notice was time-barred and based solely on a change of opinion rather than new or tangible information.
Maruti Suzuki India Ltd., a leading automobile manufacturer, filed a writ petition challenging a reassessment notice issued by the Deputy Commissioner of Income Tax for the Assessment Year (AY) 2009-10. The dispute arose after the Income Tax Department initiated reassessment proceedings under Sections 147/148 of the Income Tax Act, alleging that the company had failed to make a full and true disclosure of material facts during the original assessment.
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The original assessment, finalized on January 2, 2014, had computed the company’s total taxable income at INR 20,71,04,18,575. The Income Tax Department issued a reassessment notice on April 1, 2016, after the permissible time limit of March 31, 2016, rendering the notice time-barred.
The department raised several issues, including the company’s alleged status as a Permanent Establishment (PE) of Suzuki Motor Corporation (SMC) and its liability to deduct TDS of INR 11,29,40,00,000 on purchases from SMC. The Department questioned the classification of the company’s short-term and long-term capital gains, seeking to reclassify them as business income.
The petitioner’s counsel argued that it had made a full and true disclosure of all material facts during the original assessment, including detailed replies to queries, submission of audited financial statements, tax audit reports, and other relevant documentation. The company contended that the reassessment was based on a change of opinion and not on any new or tangible information.
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A bench of the Delhi High Court observed that the company had indeed made a full and true disclosure during the original assessment and that the reassessment notice was based solely on a change of opinion. The court explained that the AO had failed to show any new or tangible information that warranted reassessment. The court observed that the reassessment notice was issued after the statutory time limit, making it time-barred.
The court quashed the reassessment proceedings and the notice issued on April 1, 2016, holding that the notice was invalid and time-barred. The court confirmed that any action under Section 147 must be based on new and tangible information and not on a reassessment of previously disclosed facts. The writ petition was allowed.
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