Reassessment Invalid Without Concealment
GlaxoSmithKline Pharmaceuticals Limited vs. Revenue [W.P. No. 1748 of 2022]
Background of the Case
The Appellant, GlaxoSmithKline Pharmaceuticals Ltd. filed its ITR for the assessment year 2013-14 on November 30, 2013. The return was selected for scrutiny, and an assessment order under Section 143(3) of the Income Tax Act, 1961, was passed on February 22, 2017, wherein certain expenses on free samples given to doctors were disallowed as sales promotion expenses.
However, on 30th March 2021, the Assessing Officer issued a notice under Section 148 of the Act for reassessment, alleging that income had escaped assessment.
Arguments by the Appellant
The appellant argued that the reassessment notice was issued beyond the four-year period prescribed under the first proviso to Section 147 of the Act, making it legally untenable. There was no failure on its part to disclose fully and truly all material facts necessary for the assessment. The AO had already examined the issues raised in the reassessment notice during the original assessment proceedings under Section 143(3). The reassessment proceedings were merely a change of opinion by the AO, which is not permissible under the law.
Respondent’s Response
The respondent stated that the Petitioner had not made a “full and true” disclosure of material facts, which warranted reopening the assessment. Certain expenses, including sales promotion expenses and other financial entries, were not adequately scrutinized in the original assessment. The reassessment was necessary to correct any oversight in the original assessment proceedings.
Court Findings and Decision
The Bombay High Court noted that the reassessment under first proviso to Section 147 beyond four years is permissible only if the assessee has failed to disclose material facts fully and truly. In this case, the Court found no such failure. The AO had access to and had examined the relevant financial details during the original assessment. The reassessment notice was based on a mere change of opinion, which is not a valid ground for reopening an assessment beyond four years. The failure, if any, was on the part of the AO for not making additional disallowances during the original assessment, which cannot justify reassessment. Accordingly, the Court set aside the reassessment notice
Reassessment Invalid Without Concealment
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