Huawei Telecommunications (India) Company Pvt. Ltd. Vs ACIT (Delhi High Court)
Delhi High Court landmark verdict in case of Huawei Telecommunication India Co. Pvt Ltd vs ACIT CC-2 Delhi in series of writ petitions for AY 2013-14 & AY 2015-16 on special audit directions under section 142(2A) in reassessment pursuant to search carried out on 15.02.2022 and jurisdiction of reassessment on time limitation of 10 years in view of 4th proviso of section 153A(1) and definition of word asset as defined in Exl. 2 to section 153A of the Act –
Key takeaways :-
– Largely held in favour of revenue on all issues except one for AY 2013-14 on impermissible reassessment on sole verification of genuineness and allowability of expenses as roving and fishing enquiry which does not satisfy jurisdictional threshold of reopening of disclosure of income in form of an asset .
– Except above , after in depth analysis of word asset in para 145 and 146 held in favor of revenue that an asset can be said to be a present right that has the potential to produce economic benefits even in the future. It can include a right that corresponds to an obligation of another party, a right to receive cash, or a right to benefit from an obligation of another party to transfer an economic resource, if a specified uncertain future event occurs and would be an asset for purpose of section 153A of the Act (para 148 to 151) .
– Also on above basis honorable court held that reassessment notice issued for AY 2015-16 on dated 31.03.2023 and rejected time limitation argument of the petitioner .
– Most crucial observation is made by the honorable court while including powers of directing special audit under section 142(2A) under reassessment by reason that Section 2(8) of the Act defines „assessment‟ to include „reassessment‟. Further, it is settled law that once a notice under Section 143(2) of the Act is issued, the powers available to the Assessing Officer under re-assessment proceedings are analogous to those under assessment proceedings. Mr. Rai is justified in relying upon the judgment of this Court in the case of Shaily Juneja (supra) and Dart Infrabuild Pvt. Ltd. (supra), that since a return filed pursuant to a notice under Section 148 will be treated as a return under Section 139 and also since it is mandatory to issue a notice under Section 143(2) of the Act even for reassessment, it needs to be inferred that all the powers are available to the Assessing Officer during the course of regular assessment are also available during reassessment proceedings .
– In my humble view , The above decision including powers of special audit directions being part of reassessment can open Pandora box of litigation in India.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
