HC quashed the order passed by the Deputy Commissioner of Income Tax under Section 148 seeking to reopen of the assessment against the Coca-Cola India Pvt Ltd

Issue  

Petitioner filed appeal before the Bombay HC against the notice dated 28/3/2005 issued by the Deputy Commissioner of Income tax under Section 148 of the Income Tax Act seeking reopening of the assessment for the Assessment Year 1998-1999 and the consequential order dated 10/11/2005 issued by the Deputy Commissioner of Income Tax under section 143(2) of the Act and the order dated 28/2/2006. 

Facts  

• Coca-Cola India Pvt Ltd filed an application before this court to get some commercial advantages under Sections 391 to 394 of the Companies Act, 1956 for transfer sanction of its bottling manufacturing undertaking in Pune and Goa to a company Hindustan Coco-Cola Beverages Private Limited (HCCBPL). HCCBPL also filed an application in Delhi High Court for the same purpose.  
• On 3/5/1999 the scheme of arrangement was sanctioned by Bombay High Court and on 13/8/1999 Delhi High Court also sanctioned the scheme of arrangement filed in that Court by HCCBPL. 
• on 30/11/1998, petitioner filed the return of income which disclosed total loss of Rs.100,80,48,931/-. On 31/3/1999 petitioner filed revised return declaring loss of Rs.73,83,98,203/-. On 31/12/1999 petitioner filed second revised return declaring loss of Rs.23,23,42,821/- for the Assessment Year 1998-1999. 
• Thereafter the respondent issued a notice dated 10/12/2000 to petitioner under Section 143(2) of the Act and another notice on the same date under section 142(1) of the Act. For which petitioner replied vide its letter dated 24/10/2000 and furnished reasons for filing a revised return of income. 
• Later on, 30/3/2001 the Deputy Commissioner of Income Tax passed an assessment order under section 143 (3) of the Income Tax Act declaring the petitioner’s income to be ‘NIL’ after setting off earlier year’s losses to the extent of Rs.22,42,75,013/- Aggrieved by the disallowances made by respondent, petitioner filed an appeal before the Commissioner of Income Tax, Pune. 
• Thereafter, Commissioner of Income Tax had issued a show cause notice under Section 263 of the Act and on 28/3/2003 set aside the assessment order passed on 30/3/2001 and directed the Deputy Commissioner of Income Tax to pass a fresh assessment order after considering the issues. 
• On 28/3/2005, after expiry of 4 years from the relevant Assessment Year, the Deputy Commissioner of Income Tax issued a notice under Section 148 of the said Act. In response to request made by petitioner, by its communication dated 27/12/2005 provided the reasons for reopening the assessment for the Assessment Year 1998-1999.  

Findings  

In Crompton Greaves Ltd. V/s. Assistant Commissioner of Income Tax, case Bombay HC held that even if the reason for reopening does not specifically state that there was any failure on the part of petitioner to disclose fully and truly all material facts necessary for its assessment for the relevant assessment year, it will not be fatal to the assumption of jurisdiction under Sections 147 and 148 of the Act. 

Judgement  

The Bombay HC held that under Article 226 of the Constitution of India calling for the records of the Petitioner’s case and after examining the legality and validity thereof quash and set aside the notice dated 28th March, 2005 issued by Respondent under Section 148 of the Act seeking to reopen the assessment for the assessment year 1998-99 and the consequential notice dated 10th November, 2005 issued by Respondent under Section 143(2) of the Income Tax Act and the order dated 20th February, 2006.  

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