“Proceedings to Reopen Assessment not akin to Review Proceedings”: Bombay HC quashes Delayed Reopening due to Change of Opinion [Read Order]

The Bombay HighCourt, in yet another instance has underscored the requisite jurisdictional parameters to be satisfied by the Income Tax Department to effectuate reopening of an income tax assessment after a period of 4 years from the relevant assessment year.

Genesys International Corp. Ltd. (Genesys International) had filed a writ petition before the Bombay High Court challenging a notice dated 30 March 2021 issued under section 148 of the Income Tax Act, 1961, seeking to reopen the petitioner’s assessment for the year 2015-16. The original assessment had been completed on 20 December 2017 after full disclosure by the petitioner and scrutiny by the Assessing Officer (AO).

Represented by Nishit M. Gandhi, Harshad Shah and Aadnya C. Bhandari, appeared for the petitioner and submitted that although the petitioner had raised objections, the AO rejected the same and issued a draft assessment order on 14 March 2022.

The Department, represented by Akhileshwar Sharma, claimed that the petitioner had under-valued its assessable income due to not setting off losses from ineligible units before computing deduction under Section 10AA of the Income Tax Act, 1961.

Genesys International had earlier disclosed the entire computation of income, including segment-wise profit and loss statements and detailed explanations regarding unit-wise performance.

The Division Bench of Justice M.S. Sonak and Justice Jitendra Jain observed that the present issue raised by the Revenue had already achieved finality in the original assessment since it was ascertained complete disclosure of all material facts had been made that were available at the time.

Furthermore, the Revenue in its reply had admitted that reassessment proceedings were initiated due to audit objection, which was not revealed to the petitioner. Considering the decision of the Supreme Court in Commissioner of Income-tax & Ors. Vs. Yokogawa India Limited (2017).

Observing that the revenue failed to satisfy the jurisdictional parameters for reopening the assessment beyond 4 years, the Bombay High Court stated that proceedings to reopen an assessment are not akin to review proceedings.

In light of the circumstances, the Bombay High Court allowed the writ petition and made the rule absolute, thereby quashing the reassessment notice dated 30 March 2021, the order rejecting objections dated 8 February 2022, and the draft assessment order dated 14 March 2022.

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