5 Oct 2023 4:30 AM GMT
The Bombay High Court has quashed the reassessment against Knight Riders Sport and held that a change of opinion does not constitute justification to believe income chargeable to tax escaped assessment.The bench of Justice K. R. Shriram and Justice Kamal Khata has observed that there is a change of opinion because once a query has been raised during the assessment and has been answered...
The Bombay High Court has quashed the reassessment against Knight Riders Sport and held that a change of opinion does not constitute justification to believe income chargeable to tax escaped assessment.
The bench of Justice K. R. Shriram and Justice Kamal Khata has observed that there is a change of opinion because once a query has been raised during the assessment and has been answered and accepted by the AO while passing the assessment order, it follows that the query raised was a subject of consideration of the AO while completing the assessment.
The petitioner/assessee is in the business of operating and running a team in the Indian Premier League, i.e., Kolkata Knight Riders.
During the course of the assessment proceedings, the petitioner received various notices under Section 142(1). In the notice, the petitioner was called upon to furnish in writing and verify in the prescribed manner information to justify the outward remittances to any non-resident (not being a company) or to a foreign company, and in that regard, also submit relevant 15CA and 15CB certificates.
The petitioner provided details of the expenses that were incurred by non-residents or foreign companies. As regards Form 15CA and Form 15CB, the petitioner stated that since the data were voluminous, it would help if a specific list of expenses for which the two forms are required were made available.
Another notice under Section 142(1) was issued, in which the petitioner was called upon to provide details of foreign payments. The name of the players or parties, their address, and the amount paid, Tax Deducted at Source (TDS), with narration, were to be provided.
The petitioner provided the details in the format asked for. The petitioner specifically provided that consulting and team management fees were paid, and a breakup was also provided. In the breakup, the amount of Rs. 1.90 crore paid to Insignia is mentioned, and no TDS was deducted.
The assessment order under Section 143(3) was passed. The assessment order specifically refers to the various notices issued to the petitioner under Section 142(1). The payments made to Insignia or non-deduction of TDS were, however, not discussed in the assessment order.
The petitioner received the impugned notice under Section 148A(b), alleging that there was information suggesting that income chargeable to tax has escaped assessment within the meaning of Section 147.
The assessee contended that the subject matter of the information, i.e., payment to Insignia and non-deduction of TDS, was a subject of consideration during the assessment proceedings. The reopening of the assessment was merely on the basis of a change of opinion by the AO.
The court held that the reopening of the assessment by the impugned notice is merely on the basis of a change of opinion from that held earlier during the course of assessment proceedings that led to the passing of the assessment order.
Counsel For Petitioner: J.D. Mistri
Counsel For Respondent: Vipul Bajpayee
Case Title: Knight Riders Sports Pvt. Ltd. Versus ACIT
Case No.: Writ Petition No.2269 Of 2023
Click Here To Read The Order