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2010 (2) TMI 268 - HC - Income Tax


Issues:
1. Validity of notice issued by Assistant Commissioner of Income-tax under section 148 of the Income-tax Act, 1961 for reopening assessment beyond four years.
2. Dispute regarding expenditure incurred on advertisements and sales promotion during assessment years 2002-03 and 2003-04.
3. Challenge to the notice under section 148 based on failure to disclose material facts, consistency with previous assessment, and change of opinion.
4. Jurisdictional condition precedent for reopening assessment beyond four years.

Analysis:
1. The judgment by the High Court of Bombay addressed the validity of a notice issued by the Assistant Commissioner of Income-tax under section 148 of the Income-tax Act, 1961, seeking to reopen assessments beyond the four-year limit. The petitions under article 226 of the Constitution questioned the legality of the notice, which was taken up for final hearing by the court.

2. The petitioner, deriving income from audiovisual television software and related activities, faced a dispute regarding expenditure on advertisements and sales promotion for the assessment years 2002-03 and 2003-04. The initial assessment under section 143(3) allowed certain deductions, but a notice under section 148 was issued in 2009 based on a similar disallowance in a subsequent assessment year.

3. The challenge to the notice under section 148 was based on several grounds. The petitioner argued that the reopening of assessment beyond four years lacked justification as there was no failure to disclose material facts. Additionally, the basis for reopening, related to a subsequent assessment year's disallowance, was deemed inconsistent with previous assessments and a change of opinion, citing legal precedents.

4. The court analyzed the jurisdictional condition precedent for reopening assessments beyond four years. It noted that the notice did not establish a failure to fully disclose material facts necessary for assessment, a requirement for such reassessments. As a result, the court quashed the notice and set aside the order, emphasizing the importance of meeting jurisdictional conditions for reopening assessments beyond the stipulated time frame.

 

 

 

 

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