ASIAN PAINTS LTD. vs. THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE -3(4) MUMBAI A3 OTHERND

The petition is taken up for fnal disposal.

In the present petition, the petitioner challenges the notice dated 31st March 2021 issued under section 148 of the Income Tax Act, 1961 (‘the Act’), whereby it sought to reopen the assessment of the assessment year 2013-14. The petitioner also challenges the order dated 7th February 2022, whereby the objections to the issuance of notice under section 148 of the Act were rejected.

Briefy stated the material facts are as under : (a) The petitioner is a public limited company engaged inter-alia in the business of manufacturing and selling of paints, varnish, primer etc. The Shraddha Talekar, PS 2/10 Uploaded on - 09/01/2023 Downloaded on - 27/10/2026 22:47:49

The AO fnally passed the order of assessment dated 25th January 2017 under section 143(3) read with section 144C(3) of the Act for the assessment year 2013-14 computing the total income of the petitioner at Rs.1351.78 crores, after making certain disallowances refected in the advertisement and sales promotion expenses. However, it is stated that the claim of expenses under the head ‘Colour Idea Stores’ was accepted.

Notice under section 148 of the Act dated 31st March 2021 was issued seeking to reopen the assessment for the assessment year 2013-14. The reasons for reopening read as under : Reasons for reopening of the assessment in case of M/ s. Asian Paints Ltd. for A.Y. 2013-14 u/s 147 of the Income-tax Act, 1961 : The original return of income has been filed electronically on 8.11.2013 declaring total income at Rs.12,59,97,53,980/-. Subsequently, return of income was revised on 27.03.2014 declaring total income at Rs.12,48,74,49,480/-. The case of the assessee was selected for scrutiny under CASS and assessment Shraddha Talekar, PS 5/10 Uploaded on - 09/01/2023 Downloaded on - 27/10/2026 22:47:49

During the assessment proceedings u/s 143(3) of the Act in AY 2015-16, it was seen that the assessee has incurred expenses of Rs.32,44,46,533/- towards “Colour Idea Store” and debited these expenses in the P & L A/c. In A.Y. 2015,16. After thorough examination and verification during the scrutiny assessment proceedings of A.Y. 2015-16, the expenses for “Colour Idea Store” were considered as capital expenditure as against the claim of revenue expenditure by the assessee and Rs.29,20,01,880/- was added to the total income of the assessee after allowing depreciation of 10%. Further, based on the above disallowance, the case was reopened for A.Y. 2012-13 to examine the above stated issue.

The assessee furnished the details regarding the amounts involved to the above mentioned issue for A.Y. 2013-14. On perusal of the same, it is seen that an amount of Rs.17.42 crores escaped assessment as the assessee failed to disclose such information during the course of assessment proceedings.

In view of the above, the undersigned has reason to believe that the income exceeding Rs.1,00,000/- has escaped assessment within the meaning of Section 147 of the Act. Therefore, proposal for reopening of A.Y. 2013-14 by issuing notice u/s 148 of the Act is being made u/s 151 of the Act for your kind perusal and approval.

In view of the reasons recorded above, I am of the opinion that income chargeable to tax has escaped assessment for A.Y. 2013-14 by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for A.Y. Shraddha Talekar, PS 6/10 Uploaded on - 09/01/2023 Downloaded on - 27/10/2026 22:47:49

Counsel for the respondents, on the other hand, Shraddha Talekar, PS 7/10 Uploaded on - 09/01/2023 Downloaded on - 27/10/2026 22:47:49

Proviso to section 147 of the Act, as it stood then, envisaged that no action under section 147 of the Act shall be taken after the expiry of four years from the end of the relevant assessment year unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to Commissioner of Income-Tax and Others1, this Court held : 1 2004 ITR 332 Vol.268 Shraddha Talekar, PS 8/10 Uploaded on - 09/01/2023 Downloaded on - 27/10/2026 22:47:49

From the record, it is clear that during the scrutiny assessment, the AO had sought from the petitioner the relevant details with regard to the advertisement and sales promotion expenses which details were furnished by the petitioner vide its response dated 17th October 2016. It can also be seen that the AO had disallowed some of the expenses which had been refected in the break-up under the head “details of advertisement and sales promotion expenses” while passing the fnal order of assessment, which refects that the AO had applied its mind to the Shraddha Talekar, PS 9/10 Uploaded on - 09/01/2023 Downloaded on - 27/10/2026 22:47:49

Be that as it may, the notice impugned does not satisfy the jurisdictional requirement of section 147 of the Act and, therefore, is held to be unsustainable, and is accordingly quashed.

The petition is allowed. No costs. [ VALMIKI SA MENEZES, J. ] [DHIRAJ SINGH THAKUR, J.] Shraddha Talekar, PS 10/10 Uploaded on - 09/01/2023 Downloaded on - 27/10/2026 22:47:49 Powered by TCPDF (www.tcpdf.org)