Case Law Details
SKY Light Hospital LLp Vs Assistant Commissioner of Income Tax (Delhi High Court)
Delhi High Court has refuses to set aside re-assessment notice U/s. 147/148 issued by Income Tax Department to the partnership firm Sky Light Hospitality, in which Robert Vadra is a partner, in connection with the DLF- Sky Light Hospitality land deal.
High Court held that “After going through the reasons, we are satisfied that the “reasons to believe” show and establish a live link and connect with the inference drawn that income had escaped assessment, which is required for issuance of notice under Section 147/148 of the Act. Reasons to believe refer to several facts and information that had come to knowledge and was available with the Assessing Officer. At this stage, when notice is issued under Section 147/148 of the Act, firm and conclusive findings are not required for merits would be examined and thereafter final finding recorded in the assessment order. As long as, there is honest and reasonable opinion formed by the Assessing Officer and the “reasons to believe” are not mere “reasons to suspect”, the courts should not interject to stop the adjudication process and scrutiny on merits. Absolute certainty is not required at the time of issue of notice and at the same time, “reasons to believe” must not be based on mere suspicion, gossip or rumour. The said test and criteria, we have no hesitation in holding, is satisfied in the present case. There is evidence and material on record to justify issue of notice under Section 147/148 of the Act.”
Next question relates to validity of notice issued in the name of the M/s Sky Light Hospitality Pvt. Ltd. The notice had also mentioned the PAN Number of the said company. The legal position is that this company had ceased to exist and was dissolved upon conversion into a limited liability partnership as per Section 56 of the Limited Liability Partnership Act, 2008 with effect from 13.05.2016.
There is substantial and affirmative material and evidence on record to show that issue of notice in the name of M/s Skylight Hospitality Pvt. Ltd. was a mistake. Conversion of the private limited company into a limited liability partnership with effect from 13.05.2016 was noticed and mentioned in the tax evasion report, the reasons to believe recorded by the Assessing Officer, the approval obtained from the Principal Commissioner and the order under Section 127 of the Act. PAN number of the limited liability partnership was also mentioned in some of these documents. The error or mistake was that the notice did not record the aforesaid conversion of M/s Skylight Hospitality Pvt. Ltd. into M/s Skylight Hospitality LLP. In fact, the notice under Section 147/148 of the Act was not in conformity with the file noting, i.e., “reasons to believe” and approval from the Principal Commissioner.
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