EXCLUSIVE: Culver Max faces ₹289 crore income escapement charge, contests in Bombay HC

Culver Max Entertainment Pvt. Ltd., formerly Sony Pictures Networks India, is contesting an Income Tax Department move that alleges the company understated taxable income by ₹289.91 crore for Assessment Year 2019–20. The figure, cited in the Assessing Officer’s order under Section 148A(3), forms the core of the government’s case for reopening the company’s assessment.

According to the department, a combination of claims—including deductions for CSR contributions, depreciation on goodwill created through amalgamation, provisions for expenses, and interest payments to Standard Chartered Bank Mauritius—led to what it believes is a substantial underreporting of taxable income amounting to nearly ₹290 crore.

The documents reviewed by Storyboard18 show that Culver Max had originally filed its return for AY 2019-20 declaring income of ₹511.70 crore. A revised return later declared taxable income of ₹534.11 crore, which was processed under Section 143(1). The case was picked for scrutiny, leading to multiple exchanges between the taxpayer and the department in 2021. An assessment order was completed under Section 143(3) read with Section 92CA(3), determining total income at ₹539.51 crore.

Subsequently, a reassessment order under Section 147 read with Section 143(3) was passed in 2024, and the company filed rectification applications in April 2024 and January 2025. In the 148A(3) order, the department stated that income amounting to ₹289.91 crore had allegedly escaped assessment.

The reassessment proceedings began with a notice issued on March 29, 2025, followed by an order on June 25, 2025, in which the department formally recorded its conclusion that income of ₹289,91,80,933 had escaped assessment. This conclusion triggered the issuance of a fresh notice under Section 148 on the same day.

Culver Max Entertainment declined to comment on the matter when reached out by Storyboard18.

Culver Max, however, has disputed the basis of this computation, arguing before the Bombay High Court that the department’s conclusions rely on issues previously scrutinised and adjudicated in earlier assessment and reassessment cycles. The company maintains that no new tangible material exists to justify such a dramatic claim of escapement.

In its 1350 page write petition (reviewed by Storyboard18) filed in Bombay High Court, the broadcaster contends that the reassessment attempt is “without jurisdiction,” asserting that the authorities failed to obtain mandatory approval under Section 151 and that the proceedings amount to an impermissible “change of opinion.” It had sought quashing of all reassessment notices and orders issued in 2025, warning that acting on the alleged ₹289 crore discrepancy could lead to severe financial and operational consequences.

A division bench of Bombay High Court comprising Justices B.P. Colabawalla and Firdosh P. Pooniwalla set aside a reassessment notice issued to Culver Max Entertainment Pvt Ltd under Section 148 of the Income Tax Act, ruling that the notice was invalid because it was not issued by the mandated Faceless Assessing Officer.

The court held that the issue was fully covered by an earlier judgment in Hexaware Technologies Ltd vs ACIT, where the court had ruled that reassessment notices must be issued only by a Faceless Assessing Officer and not by a jurisdictional officer.

The court quashed the Section 148 notice issued to Culver Max and all consequent proceedings and orders stemming from it. This effectively nullifies the Income-Tax department’s attempt to reopen the company’s assessment for the relevant year.

In an unusual but pragmatic procedural direction, the bench granted liberty to the Income-Tax department to revive the writ petition if the Supreme Court eventually overturns the Hexaware decision.

The bench clarified that no fresh interim application would be required and a simple praecipe would be sufficient to restore the matter. However, the judges also noted that if the Supreme Court dismisses the government’s appeal, “there would be no question of any revival.”

The Supreme Court has not issued a final, binding judgment yet that definitively validates or invalidates the interpretation in Hexaware. Some SLPs have been dismissed, yet that does not settle the law across all jurisdictions.

The question of whether only FAOs (or both FAOs and JAOs) can issue reassessment notices remains sub-judice, and courts across India continue to adjudicate it differently. In other words: the principle established by Hexaware is operational in many cases, but it has yet to become a uniform national rule through a final Supreme Court decision.

With the reassessment notice struck down, the high-stakes dispute over the alleged ₹289-crore understatement now hinges on the Supreme Court’s future stance on the Hexaware precedent.