Gujarat High Court Rules on Deloitte’s Challenge to Income Tax Reassessment Notice

Gujarat High Court Rules on Deloitte’s Challenge to Income Tax Reassessment Notice



Key Highlights:

Petitioner: M/s. Deloitte Haskins & Sells

Issue: Challenge to Section 148 notice under Income Tax Act, 1961

Allegation: Escaped income from foreign entities (Spain & Japan)

Claim: Reassessment initiated without new tangible material

Court’s View: Reassessment cannot be based on a mere “change of opinion”


Gujarat High Court is reviewing whether the Income Tax Department’s actions violated principles of natural justice.

The Gujarat High Court recently addressed a *writ petition filed under Article 226 of the Constitution by “M/s. Deloitte Haskins & Sells,”* a partnership firm practicing as chartered accountants. The firm challenged a notice issued under Section 148 of the Income Tax Act, 1961, seeking its quashing and an injunction against further proceedings by the Income Tax Department. The case centered on alleged escaped income from foreign entities, including payments received from Spain and Japan, and the department’s failure to address the petitioner’s objections before proceeding with reassessment.

*Key Points:*

*1. Challenge to Section 148 Notice:*

The petitioner contested the validity of the notice issued under Section 148, arguing that the reassessment was initiated based on a mere “change of opinion” without any new tangible material. The Gujarat High Court has previously held that reassessment cannot be initiated on a mere change of opinion for material already scrutinized in previous assessments.



*2. Alleged Escaped Income:*

The reassessment pertained to alleged escaped income from foreign entities, including payments received from Spain and Japan. The petitioner maintained that all relevant details were furnished during the original assessment, and no new information had surfaced to justify the reassessment.

*3. Non-Consideration of Objections:*

The petitioner asserted that the Income Tax Department proceeded with the reassessment without addressing the objections raised, violating principles of natural justice. The Gujarat High Court has previously invalidated assessment orders due to violations of procedural requirements under Section 144B, emphasizing the necessity of considering taxpayers’ objections.

*Court’s Decision:*

While the specific outcome of this particular case is not detailed in the available sources, the Gujarat High Court has consistently ruled that:

*Reassessment notices under Section 148 cannot be issued based on a mere change of opinion for material already scrutinized in previous assessments.*

*Procedural lapses, such as failing to consider taxpayers’ objections, can render assessment orders invalid.*


*These precedents suggest that the court may favor the petitioner’s stance if similar circumstances apply.*