S. 147 : Reassessment – After the expiry of four years – No failure to disclose material facts – Change of opinion – Capital gains or business income – Sale of shares – Reassessment proceedings are quashed. [S. 28(i), 45, 148, 154, Art. 226]

The assessment was completed under section 143(3) of the Act and thereafter the rectification order was passed under section 154 of the Act. The assessment was reopened and the order was passed. The assessment was once again reopened beyond period of four years on the ground that there has been an escapement of assessment on the ground the sale of shares of TCS Division by Petitioner was nothing but business income and therefore the profits arising out of the sale of shares held by Petitioner in the group companies would be treated as Petitioner’s income from business, and not profits arising out of sale of investment. On writ the Court held that the reasons for re-opening the assessment is based on incorrect facts or conclusions, certainly the notice issued for re-opening cannot be sustained also indicates non- application of mind where the scrutiny assessment was completed and order under section 143(3) of the Act has been passed followed by a rectification order under section 154 of the Act. Therefore, Petitioner’s case has been considered at two stages, (i) When the assessment order was passed after scrutiny under section 143(3) of the Act and (ii) When an order under section 154 of the Act was passed. The Court held that the reassessment is based on change of opinion. Accordingly, the reassessment proceeding was quashed. (WP. No. 2545 of 2010 dated February 3, 2022 (AY 2005-06).

Tata Sons Limited v. Dy.CIT (Bom.)(HC) www.itatonline.org
[Coram : Hon’ble Shri Justice K. R. SHRIRAM & Hon’ble Shri Justice N. J. JAMADAR]