The assessee sold beauty care products and provided consultancy services. It declared income from sale of products and income from provision of services. The AO issued a notice under section 142(1) and the assessee furnished the details of advertisement expenses as sought for. Thereafter, an order under section 143(3) was passed accepting the return of income. After a period of four years, a notice under section 148 was issued to reopen the assessment under section 147 for the AY 2012-13 and within period of four years for AY 2013-14, on the ground that the advertisement and marketing expenditure incurred by the assessee was not deductible under section 37 since the assessee was prohibited from advertising under the provisions of the Indian Medical Council Act, 1956 , read with Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002. The objections raised by the assessee were rejected. On writ , allowing the petitions, that in the original assessment the AO was aware of the issue of expenses incurred on advertisement and marketing by the assessee. Once he had applied his mind in the regular assessment proceedings of the assessee having incurred advertisement and marketing expenditure, it was not open for him to reopen the assessment under section 147. In the original assessment the assessee was called upon to differentiate between the nature of expenses shown under the head depreciation and amortization vis-a-vis advertisement and marketing expenses shown in the profit and loss account. The requisite details, including a copy of agreement, actual advertising invoices, were filed and the issue was discussed with the Assessing Officer at length before he passed the order under section 143(3). The notices under section 148 for reopening the assessment under section 147 were issued merely on change of opinion and therefore, set aside. Followed Aroni Commercial Ltd v. Dy CIT ( 2014) 362 ITR 403 ( Bom) (HC), Marico Ltd v. ACIT ( 2019) 111 taxmann.com 53 ( Bom) ( HC) (AY. 2012-13 , 2013-14)
Rich Feel Health and Beauty Private Limited v. ITO (2022) 440 ITR 41/ 284 Taxman 286 (Bom) ( HC)/Editorial: SLP of Revenue dismissed , ITO v. Rich Feel Health & Beauty (P.) Ltd (2023) 291 Taxman 203 (SC)
S.147: Reassessment – Two assessment years reopened – One with in four years – One after the expiry of four years – Condition Precedent — Primary facts necessary for assessment fully and truly disclosed — AO had applied his mind – Not open for the AO to reopen assessment based on very same material and to take a different view – Notices for reopening on change of opinion – Invalid [S. 148, Art , 226 ]