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III. Direct Taxes Case Law:
1. New Delhi Television Ltd. Vs. DCIT, Civil Appeal No. 1008 of 2020, Date of Judgement - 03.04.2020, Supreme Court of India
I.
Whether revenue is justifiable in issue a notice u/s 148 of the Income
Tax Act, 1961 after expiry of 4 years, where assessee has disclosed all
the primary facts required during the original assessment?
Held: No
II.
If the AO intends to rely upon the second Proviso to section 148 of the
Act for the extended period of 16 years limitation, the same should be
stated either in the notice or in the reasons in support of the notice.
Held: Yes
Brief Facts:
Assessee, being an Indian company engaged in running television
channel filed its ROI on 29.09.2008 for AY 2008-09. The case of assessee
was selected for scrutiny and an order u/s 143(3) was passed on
03.08.2018 making an addition on account of guarantee fee for acting as
guarantor in arranging the finance to one of its subsidiary company. On
31.03.2015, a notice u/s 148 of the Act was issued upon assessee for
the reason that the finance arranged by assessee for its subsidiary
company was nothing but sham and bogus transactions and that these
transactions were done with a view to get the undisclosed income, for
which tax had not been paid, back to India by this circuitous round
tripping. However, assessee challenge the notice issued u/s 148 of the
Act and filed its objection stating that there had been no failure on
the part of assessee to disclose fully and truly all material facts
necessary to make an assessment. Ld. AO disposed of the objection filed
by assessee on the ground that assessee had failed to disclose material
facts during the original assessment. Aggrieved, the assessee filed
writ petition before high court challenging the notice issued u/s 148 of
the Act, which was dismissed by Hon’ble High Court. Against this assessee is in now appeal before Hon’ble Supreme Court.
Held:
I. Hon’ble Supreme Court following the judgement passed in the
case of Calcutta Discount Co. vs. ITO (SC), held that “the assessee
disclosed all the primary facts necessary for assessment of its case to
the assessing officer. What the revenue urges is that the assessee did
not make a full and true disclosure of certain other facts. We are of
the view that the assessee had disclosed all primary facts before the
assessing officer and it was not required to give any further assistance
to the assessing officer by disclosure of other facts. It was for the
assessing officer at this stage to decide what inference should be drawn
from the facts of the case. In the present case the assessing officer
on the basis of the facts disclosed to him did not doubt the genuiness
of the transaction set up by the assessee. This the assessing officer
could have done even at that stage on the basis of the facts which he
already knew.”
II.
Hon’ble Supreme Court Held that “If the revenue is to rely upon the
second proviso and wanted to urge that the limitation of 16 years would
apply, then in our opinion in the notice or at least in the reasons in
support of the notice, the assessee should have been put to notice that
the revenue relies upon the second proviso. The assessee could not be
taken by surprise at the stage of rejection of its objections or at the
stage of proceedings before the High Court that the notice is to be
treated as a notice invoking provisions of the second proviso of Section
147 of the Act. Accordingly, we answer the third question by holding
that the notice issued to the assessee and the supporting reasons did
not invoke provisions of the second proviso of Section 147 of the Act
and therefore at this stage the revenue cannot be permitted to take
benefit of the second proviso.”
(Please click here for judgment)
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