TMI Blog2010 (2) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... - 8719 and 8720 of 2009 - - - Dated:- 17-2-2010 - CHANDRACHUD D. Y. DR., DEVADHAR J. P. JJ For Appelant Percy J. Pardiwala, Prakash Shah and Sumeet Ranghnai. For respondent - Vimal Gupta. JUDGMENT 1 . Dr. D. Y. Chandrachud J .- Rule, by consent made returnable forthwith. Counsel for the respondents waives service. With the consent of counsel, both the petitions are taken up for final hearing. 2. Both the petitions under article 226 of the Constitution seek to question the validity of a notice issued by the Assistant Commissioner of Income-tax, Range 11(1), Mumbai, under section 148 of the Income-tax Act, 1961 by which an assessment which was carried out under section 143(3) was sought to be reopened beyond a period of four years from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... geable to tax for the assessment year had escaped assessment. By a communication dated July 8, 2009, reasons were furnished to the petitioner for reopening the assessment. The reasons furnished by the Assessing Officer record that during the course of assessment proceedings for the assessment year 2005-06, the Assessing Officer had made one specific addition under the head advertisements, sales promotion and market research expenses wherein a certain amount was added back to the income of the assessee. The finding of the Assessing Officer for the subsequent year (2005-06) is adverted to. The Assessing Officer then observed as follows: "Similar issue of advertisement and publicity expenses is there for the assessment year 2002-03. Herein, this year, the assessee has debited Rs. 17,76,91,375 under the head 'Advertisement and publicity expenses' and Rs. 2,03,94,431 under 'Market research expenses'. Hence, in total, assessee company has debited the selling and distribution charges for Rs. 19,80,85,806. This issue had not been raised by the Assessing Officer during scrutiny assessment proceedings. The assessee had also not made any specific representation and as such the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal, two members of the Tribunal differed and on a reference, a third member of the Tribunal came to the conclusion that the entire expenditure was liable to be allowed as expenditure paid out wholly and exclusively for the purposes of business under section 37(1). The judgment of the Tribunal was confirmed by a Division Bench of this court on March 24, 2009. Consequently, the basis on which assessment is sought to be reopened has no valid foundation in law since the order of the Assessing Officer under section 143(3) is consistent with the position which is accepted in the decision of this court. Thirdly, it is submitted that full details were furnished by the assessee of its advertisement and sales expenses during the course of the assessment proceedings. Those were inquired into when the order of assessment was passed under section 143(3). Issuance of a notice under section 148 would, therefore, merely amount to a change of opinion, which is not permissible in view of the judgment of the Supreme Court in CIT v. Kelvinator of India Ltd. [2010] 320 ITR 561. 9. On the other hand, it was urged on behalf of the Revenue that (i) the assessment was sought to be reopened on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er was apprised of the circumstance that the business of the petitioner consisted in the collection of subscriptions from subscribers of television channels and for procuring advertisements. The fact that the petitioner was acting as an agent for a foreign principal was disclosed. 12. The notice issued by the Assessing Officer under section 148 does not state that there was a failure on the part of the assessee to fully and truly disclose all material facts necessary for the assessment for the assessment year 2002-03. The assessment was sought to be reopened after the expiry of a period of four years from the end of the relevant assessment year. In such a case the jurisdictional condition precedent stipulated by the proviso to section 147 is a failure on the part of the assessee to fully and truly disclose all material facts necessary for assessment for that assessment year consequent upon which income chargeable to tax has escaped assessment. That has not been fulfilled. The notice does not even purport to state so. The ground furnished in the notice for reassessment would at the highest indicate that according to the Assistant Commissioner of Income-tax, allocation of expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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