ACIT Vs Experion Developers Pvt Ltd. (Supreme Court of India)
The batch of writ petitions before the Delhi High Court challenged reassessment notices issued under Section 148 of the Income Tax Act for AYs 2008–09 and 2011–12 (and related years), which were based on information received from the Directorate of Intelligence and Criminal Investigation alleging that investments received from a Singapore-based entity were routed through conduit structures and lacked genuine creditworthiness. The original assessments in several cases had either been completed under Section 143(1) or 143(3) without additions, while the reassessments were initiated years later on the basis of similar investigation reports. During the pendency of the writ petitions, the assessees placed on record subsequent assessment orders for later years showing that identical capital infusions and transactions from the same foreign investor had been examined in detail and accepted by the Department without any adverse findings. The Revenue did not controvert these subsequent developments. The High Court noted that although reassessment for AY 2012–13 on similar reasons had earlier survived judicial scrutiny at the notice stage, the reassessment proceedings for that year ultimately culminated in an order accepting the transactions without additions. Further, in other later years, the identity, creditworthiness, and genuineness of the same foreign investor had been consistently accepted in completed assessments and appellate orders. In this backdrop, the High Court held that once the very foundation of the reopening—namely doubts regarding the foreign investor and the genuineness of the transactions—stood negated by subsequent accepted assessments, the “reasons to believe” for reopening earlier years no longer survived. Consequently, the reassessment notices for AYs 2008–09 and 2011–12 were quashed. The Revenue carried the matter to the Supreme Court by way of Special Leave Petition. The Supreme Court dismissed the SLP both on the ground of unexplained delay of 198 days and on merits, finding no reason to interfere with the High Court’s decision, thereby affirming that reopening could not be sustained when the basis for such reopening had ceased to exist.
Read Delhi HC Judgment in above case: Earlier Year Reopening Invalid After Same Transactions Approved Later: Delhi HC
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
