BMW INDIA FINANCIAL SERVICES PRIVATE LIMITED vs. DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE1(1), GURUGRAM AND OTHERS

Facts

The petitioner, BMW India Financial Services Private Limited, filed its income tax return for Assessment Year 2016-17 on 30.04.2016, declaring an income of Rs. 92.74 crores, which included a net disallowance of Rs. 18.97 crores towards doubtful debts. A revised return was filed on 30.03.2018, declaring a revised income of Rs. 93.60 crores, also including the Rs. 18.97 crores. A final assessment order was passed on 30.03.2021, accepting the total income at Rs. 93.60 crores. Subsequently, on 10.03.2023, a notice under Section 263 of the Income Tax Act, 1961, was issued to the petitioner regarding the Rs. 18.97 crores. The petitioner clarified that this amount was already part of its accepted income. Proceedings under Section 263 were dropped on 27.03.2023. Despite this, a notice dated 21.04.2023 under Section 148A(d) and a notice dated 21.04.2023 under Section 148 of the Act were issued, alleging wrongful deduction of Rs. 18.97 crores for AY 2016-17. An affidavit confirmed tax payment on this amount.

Held

The High Court held that the impugned order dated 21.04.2023 passed under Section 148A(d) of the Income Tax Act, 1961, and the notice dated 21.04.2023 issued under Section 148 of the Act are not sustainable. The Court noted the undisputed facts that the amount of Rs. 18.97 crores was already declared by the petitioner, included in its revised return, and accepted by the revenue authorities through the final assessment order dated 30.03.2021. Furthermore, an affidavit filed by the Deputy Commissioner of Income Tax confirmed that the petitioner had paid income tax on this specific amount. The Court found it unsustainable to initiate fresh proceedings under Section 148A and Section 148 when the matter had already been concluded and accepted by the revenue, and tax had been paid. Therefore, the impugned order and notice were quashed. The ratio decidendi is that once an income has been declared, accepted by the revenue in a final assessment order, and tax paid thereon, the revenue cannot reopen the issue by issuing a notice under Section 148 based on the same grounds without any new material.

Key Issues

1. Whether the impugned order dated 21.04.2023 passed under Section 148A(d) of the Income Tax Act, 1961, and the notice dated 21.04.2023 issued under Section 148 of the Act are sustainable, given that the amount in dispute (Rs. 18.97 crores) was already declared, accepted in the final assessment order for AY 2016-17, and subsequently confirmed by an affidavit stating tax payment on it. Assessee's Contention: The petitioner argued that the impugned notice and order are not sustainable because the amount of Rs. 18.97 crores was already declared as part of its income, accepted by the revenue authorities in the final assessment order dated 30.03.2021, and tax has been paid on it. The prior proceedings under Section 263 were also dropped after the petitioner's clarification. Revenue's Contention: The judgment does not record any specific arguments made by the revenue in response to the petitioner's challenge to the Section 148A(d) order and Section 148 notice.