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2020 Supreme(Del) 21
IN THE HIGH COURT OF DELHI AT NEW DELHI
VIPIN SANGHI, SANJEEV NARULA, JJ.
Experion Developers Pvt. Ltd. - Petitioner
Versus
Assistant Commissioner of Income Tax & Others - Respondents
W.P.(C). Nos. 11302, 11303 of 2019, CM. APPL. Nos. 46536 to 46542 of 2019
Decided On : 13-02-2020
For the Petitioner:Ajay Vohra, Senior Advocate, Kavita Jha, Vaibhav Kulkarni, Advocates
For the Respondents: Ruchir Bhatia, Senior Standing Counsel
Headnote:(A) Income Tax Act, 1961 - Sections 147 and 148 - Reassessment proceedings initiated based on new material received by DIT regarding dubious investments - Petitioners challenged reopening alleging lack of fresh grounds and change of opinion - Court emphasized that Assessing Officer requires tangible material and application of mind to initiate proceedings. (Paras 1, 9, 34-35, 50)
(B) Jurisdiction - Reassessment beyond four years permissible if income escaped due to failure to disclose material facts by the assessee - Court clarified that both new evidence and failure to disclose facts justify reassessment. (Paras 33, 39)
(C) Sanction - Sanction under Section 151 obtained from appropriate authority is a necessary pre-requisite for valid reassessment notices - Court held that mechanical approvals are insufficient, yet valid if the authority reasonably assesses the need for reassessment. (Paras 40-42)
(D) Separate Notices - Issuance of a single notice in the name of the amalgamated entity valid under Section 170(2) regarding the assessment of prior liabilities, eliminating the need for multiple notices. (Paras 44-48)
| Table of Content |
|---|
| 1. factual context of the case (Para 1 , 2 , 3 , 4 , 5 , 6 , 7) |
| 2. arguments regarding validity and application of reassessment proceedings (Para 9 , 10 , 11 , 12 , 13 , 14) |
| 3. court’s analysis of the reasons for reassessment (Para 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30) |
| 4. legal standards for reassessment (Para 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39) |
| 5. final decisions and conclusions on the case (Para 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48 , 49) |
JUDGMENT :
Sanjeev Narula, J.
Brief Factual Background
1. The present petitions under Article 226 /227 of the Constitution of India are directed against two separate notices both dated 31.03.2019 issued by respondent No.1 under Section 148 of the INCOME TAX ACT (hereinafter referred to as “the Act”), for the assessment year (AY) 2012-13 and the orders dated 25.09.2019 disposing of the objections filed by the respective petitioners and also the proceedings emanating there from. The grounds for reopening assessment in both cases are a result of the very same investigation and inquiry carried out by the DIT (Intell. & Cr. Inv.), New Delhi. The reasons recorded for reopening the assessment in respect of both the petitioners are also similar, except for certain distinguishing facts. Besides, the petitioners raise similar grounds of challenge, and therefore it is considered appropriate to dispose of both the petitions by way of a common judgment.
2. For the purpose of disposal of present petitions, the facts in W.P.(C)11302/2019 are being noted extensively. The essential differences are noted separately.
W.P.(C) 11302/2019
3. Petitioner is a private limited company engaged in the business of construction-development projects. Pursuant to a scheme of amalgamation approved by this Court vide order dated 20.12.2012, M/s. Experion Developers International Pvt. Ltd [hereinafter referred to as ‘EDIPL’, the erstwhile assessee], amalgamated with M/s. Experion Developers Pvt. Ltd. [hereinafter referred to as ‘EDPL’, the successor-in-interest and Petitioner herein] with effect from 01.04.2012. During the financial year relevant to the assessment year under consideration i.e. AY 2012-13, (FY 2011-12) the Petitioner and the erstwhile-assessee, EDIPL, were separate/independently assessable assessees. For the assessment year under consideration, i.e., AY 2012-13, as Petitioner (EDPL) was the only surviving entity, it alone filed return of income declaring loss of Rs.7,82,95,075/-. The return of income was selected for scrutiny and after making certain disallowances, the total income was assessed at Rs. 90,15,239/- and assessment order dated 19.03.2015 was passed under Section 143(3) of the Act. The said order is presently subject matter of a pending appeal.
4. Subsequently, Respondent No.1 issued the impugned notice dated 31.03.2019 under section 148 of the Act along with a copy of the reasons recorded, proposing to reassess the income of the Petitioner for the assessment year 2012-13. In response to the aforesaid notice, the Petitioner filed the letter dated 29.04.2019 submitting copy of return e-filed on 25.04.2019 declaring loss of Rs.7,82,95,075/-. The recorded reasons are primarily based on the ground that the investing / parent company, M/s. Gold Hotels & Resort Pte. Ltd. (also referred to as “Gold Singapore”), had made investment of Rs.36.91 crores in the Petitioner Company (EDPL) and Rs.183 crores in erstwhile EDIPL, though the said investing company did not appear to be carrying out any regular business activities in Singapore and has been floated to act as a conduit to funnel funds into Indian companies. The source of investment in the assessee company raises serious doubts and suspicion regarding the genuineness of investments. The assessee is a beneficiary of these credits and has failed to disclose material facts earlier. Therefore, t
