Bombay High Court Quashes Reassessment, Cites Lack of Failure to Disclose Income by Citibank
Bombay High Court Quashes Reassessment, Cites Lack of Failure to Disclose Income by Citibank
In cases where a notice has been issued after four years has elapsed, the Bombay High Court has ruled that the burden rests on the Assessing Officer (AO) to demonstrate that taxable income has escaped assessment due to the assessee's failure to disclose all relevant and accurate information essential for the assessment of that particular assessment year.
Justices K. R. Shriram and M. M. Sathaye of the bench noted that the reasons provided did not contain any indication or evidence to suggest that Citibank had failed to disclose all essential and accurate information required for its assessment.
The petitioner, a corporate entity incorporated in the United States of America, has been conducting business in India through its branches. The petitioner has contested the respondent's decision to reopen the completed assessment for the Assessment Year 1992-1993.
The petitioner argued that despite making multiple requests for reasons to believe, they were not provided with the necessary information.
The petitioner argued that once the assessment for the entire year has been settled under the provisions of the Kar Vivad Samadhan Scheme 1998 (KVSS), the reassessment notice should be invalidated. The Designated Authority thoroughly considered the matter and issued an order under Section 90, which was duly complied with by paying the computed tax under the KVSS. Therefore, there should be no grounds for reopening any issue that was already addressed and resolved by the Designated Authority's order.
The department argued that filing a declaration under the Kar Vivad Samadhan Scheme (KVSS) does not necessarily imply closure or finality in the matter.
The Court ruled that the reopening of the assessment was solely based on a change of opinion by the AO, which is not sufficient justification or valid grounds to believe that taxable income has escaped assessment.
