FM INDIA SUPPLY CHAIN PRIVATE LTD. vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 1(1)

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WP/2510/2024HC BombayHCBM01045757202310 May 2024Author: HON'BLE SHRI JUSTICE K.R. SHRIRAM,HON'BLE JUSTICE DR. NEELA KEDAR GOKHALE3 pages
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What did the High Court hold?

The Bombay High Court held that the reopening of assessment was based on a change of opinion, which is not a valid ground for reopening, reaffirming the principle laid down in Siemens Financial Services Private Limited. Furthermore, the court found that the notice issued under Section 148 of the Income Tax Act, 1961, was invalid as it was contrary to the provisions of Section 151A of the Act and the scheme framed thereunder, as per the ruling in Hexaware Technologies Limited. Consequently, the court quashed and set aside the notice dated 28th March 2023 issued under Section 148A(b), the order dated 13th April 2023 passed under Section 148A(d), and the notice dated 13th April 2023 issued under Section 148. The petition was disposed of accordingly.

What were the facts?

The petitioner, FM India Supply Chain Private Ltd., challenged a notice issued under Section 148A(b) of the Income Tax Act, 1961, and subsequent proceedings. The petitioner argued that the reopening was based on a 'change of opinion', which is not a valid ground for reopening assessments, citing the Bombay High Court's decision in Siemens Financial Services Private Limited. The revenue, represented by the Assistant Commissioner of Income Tax, Circle 1(1), Pune, contended that after the insertion of Section 148A, a change of opinion could not be a ground to challenge reopening. The petitioner further argued that the notice under Section 148 was invalid as it was contrary to Section 151A of the Act, referencing the judgment in Hexaware Technologies Limited. The revenue's counsel agreed with the submissions made by the petitioner on these points.

What were the issues?

1. Whether the reopening of assessment based on a 'change of opinion' is valid under Section 148A of the Income Tax Act, 1961, in light of the judgment in Siemens Financial Services Private Limited v. Deputy Commissioner of Income Tax & Ors.? 2. Whether a notice under Section 148 of the Income Tax Act, 1961, issued by the Jurisdictional Assessing Officer (JAO) is invalid as being contrary to the provisions of Section 151A of the Act and the scheme framed thereunder, as held in Hexaware Technologies Limited v. Assistant Commissioner of Income Tax Circle 15(1)(2) Mumbai and Ors.? Assessee's Contentions: The reopening is based on a change of opinion, which is not a valid ground for reopening, as per Siemens Financial Services Private Limited. The notice under Section 148 is invalid as it contravenes Section 151A of the Act, following Hexaware Technologies Limited. Revenue's Contentions: After the insertion of Section 148A, a change of opinion cannot be a valid ground to challenge the reopening. The revenue's counsel agreed with the assessee's submissions on the law laid down in Siemens Financial Services Private Limited and Hexaware Technologies Limited.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148,Section 151A

AI-generated summary — verify with the full judgment below

1/3 949-WP-2510-2024.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 2510 OF 2024 FM India Supply Chain Private Ltd. ….Petitioner V/s. Assistant Commissioner of Income Tax Circle 1(1), Pune …Respondent ALONGWITH INTERIM APPLICATION (ST) NO. 14687 OF 2024 IN WRIT PETITION NO. 2510 OF 2024 Assistant Commissioner of Income Tax Circle 1(1), Pune ….Applicant In the Matter Between FM India Supply Chain Private Ltd. ….Petitioner V/s. Assistant Commissioner of Income Tax Circle 1(1), Pune …Respondent ---- Mr. Nikhil Rungta for Petitioner. Mr. Arjun Gupta for Respondents-Revenue. ---- CORAM : K.R. SHRIRAM & DR. NEELA GOKHALE, JJ.

DATED : 10th MAY 2024 P.C. : INTERIM APPLICATION (ST) NO. 14687 OF 2024

1.

For the reasons mentioned in the Interim Application (ST) No. 14687 of 2024 delay is condoned.

2.

Interim Application (ST) No. 14687 of 2024 stands disposed. Purti Parab PURTI PRASAD PARAB PURTI PRASAD PARAB Date: 2024.05.10 19:14:27 +0530

2/3 949-WP-2510-2024.doc WRIT PETITION NO. 2510 OF 2024

3.

In our order dated 12th March 2024, we have recorded petitioner’s submission that the entire basis of issuance of notice under Section 148A(b) of the Income Tax Act, 1961 (the Act) is change of opinion and as held by this court in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors.1 , will not be a valid ground to reopen. In the affidavit in reply the stand that is that after the insertion of Section 148A of the Act change of opinion cannot be the valid ground to challenge the reopening. We disagree since the law, as held by this court in Siemens Financial Services Private Limited (supra), is change of opinion cannot be a ground to reopen the assessment.

4.

Mr. Rungta submitted that in the recent judgment pronounced by this court in Hexaware Technologies Limited v. Assistant Commissioner of Income Tax Circle 15(1)(2) Mumbai and Ors.2 , the court has held that the notice under Section 148 of the Act issued by the Jurisdictional Assessing Officer (JAO) will be invalid as the same will be contrary to the provisions of Section 151A of the Act and the scheme framed there under. On the law as laid down by this court in Siemens Financial Services Private Limited (supra) and Hexaware Technologies Limited (supra), Mr. Gupta in fairness agrees. 1 (2023) 457 ITR 647 (BOM) 2 2024 SCC OnLine 1249 Purti Parab

3/3 949-WP-2510-2024.doc

5.

Therefore, having considered the petition and the documents annexed thereto, we would agree with the submissions made by Mr. Rungta that the reopening is based on change of opinion and the notice issued under Section 148 of the Act will also be hit by the law as laid down in Hexaware Technologies Limited (supra).

6.

In the circumstances, notice dated 28th March 2023 issued under Section 148A(b) of the Act, the order dated 13th April 2023 passed under Section 148A(d) and notice dated 13th April 2023 issued under Section 148 are hereby quashed and set aside.

7.

Petition disposed. (DR. NEELA GOKHALE, J.) (K.R. SHRIRAM, J.) Purti Parab

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