Facts of the Case

The petitioner, Maruti Suzuki India Ltd., filed its return of income for Assessment Year 2009-10, which was scrutinised and assessed under Section 143(3) read with Section 144C of the Income-tax Act, 1961. The petitioner had made extensive disclosures including filing of audit report, Form 3CEB, tax audit report, and detailed responses to multiple statutory notices during assessment proceedings.

The original assessment was completed on 02 January 2014. Subsequently, the Assessing Officer initiated reassessment proceedings under Sections 147/148 based on issues identified in Assessment Year 2010-11 relating to alleged permanent establishment, non-deduction of tax at source, treatment of share transactions, disallowance under Section 35(2AB), and provision for warranty.

The notice under Section 148, though dated 31 March 2016, was admittedly dispatched on 01 April 2016.

Issues Involved

Whether the reassessment notice issued under Section 148 after the expiry of the limitation period prescribed under Section 149 was valid, and whether reassessment based on issues already examined during original assessment amounted to an impermissible change of opinion in the absence of failure to make full and true disclosure.

Petitioner’s Arguments

The petitioner contended that the reassessment notice was barred by limitation since the last date for initiating reassessment for AY 2009-10 was 31 March 2016, whereas the notice was dispatched only on 01 April 2016. It was argued that mere generation of a notice does not amount to issuance under Section 149.

It was further contended that all material facts had been fully and truly disclosed during the original assessment proceedings, that each of the issues forming the basis of reassessment had been specifically examined, and that reopening the assessment amounted to a pure change of opinion, which is prohibited under the proviso to Section 147.

Respondent’s Arguments

The Revenue argued that information received during assessment proceedings for AY 2010-11 constituted new material justifying reassessment. It was contended that the Assessing Officer was entitled to rely upon subsequent findings and that the petitioner had not furnished complete information during the original assessment, thereby warranting reopening.

Court Order / Findings

The Delhi High Court held that the reassessment notice was clearly barred by limitation. Relying on its earlier decision in Suman Jeet Agarwal v. ITO, the Court reiterated that for the purposes of Section 149, a notice is “issued” only when it is actually dispatched, and not merely generated or signed. Since the notice was dispatched on 01 April 2016, beyond the statutory deadline, the reassessment proceedings were liable to be quashed on this ground alone.

The Court further examined the reasons recorded for reopening and held that all four issues relied upon by the Revenue had been the subject matter of detailed queries and replies during the original assessment. The record clearly demonstrated full and true disclosure by the petitioner and due application of mind by the Assessing Officer. Reopening the assessment on the same material, prompted merely by conclusions drawn in a subsequent assessment year, amounted to an impermissible change of opinion.

Important Clarification

The Court clarified that reassessment cannot be initiated merely because a different view is taken in a subsequent assessment year, unless new tangible material comes to light demonstrating failure of disclosure. It reaffirmed that statutory limitation under Section 149 must be strictly complied with and that delegated administrative processes cannot dilute legislative safeguards.

Final Outcome

The writ petition was allowed. The Delhi High Court quashed the reassessment proceedings and set aside the notice issued under Section 148 as being time-barred and unsustainable in law.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770016891_MARUTISUZUKIINDIALTD.VsDEPUTYCOMMISSIONEROFINCOMETAX.pdf

 

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.