Bogus Royalty Expenses Exceed ₹50 Lakh: Bombay HC Upholds Income Tax Reassessment Beyond 3 Years

The Bombay High Court upheld the Income Tax Department’s reassessment beyond three years, finding that the taxpayer claimed bogus royalty payments exceeding ₹50 lakh without valid documentation. The taxpayer argued that reassessment was barred by the three-year limitation under Section 147 of the Income Tax Act, 1961. The court rejected this contention, noting that substantial evidence indicated deliberate misstatement of income and concealment of material facts. The judgment reinforces that the statutory limitation period can be extended in cases of income concealment or fraud. It also clarifies that taxpayers cannot escape reassessment merely by relying on procedural timelines if there is clear evidence of evasion or misreporting. This ruling sets a precedent for strict scrutiny of royalty and related-party transactions to prevent tax evasion.