Vivo Mobile India Private Limited Vs ACIT & Anr. (Delhi High Court)
The Delhi High Court has set aside the reassessment proceedings initiated against Vivo Mobile India Private Limited for Assessment Year (AY) 2018-19, ruling that the Assessing Officer (AO) becomes functus officio after the completion of an assessment. The court observed that to regain jurisdiction for reassessment, the AO must provide relevant incriminating material to the assessee before proceeding, ensuring adherence to the principles of natural justice.
Read SC Judgment in this case: SC Set Aside Reassessment Notice Due to Non-Disclosure of Material Facts by Revenue
The case stemmed from a notice issued under Section 148A(b) of the Income Tax Act, 1961, based on information regarding bogus capital expenses linked to a fictitious entity, M/s. Zhongmao (India) Eng. Pvt. Ltd. Vivo India clarified that its transactions were with M/s. Zhonghua (India) Eng. Pvt. Ltd., not Zhongmao. The Revenue, upon physical verification, found no such entity operating at the stated address and concluded it was a paper entity facilitating accommodation entries. Subsequently, an order under Section 148A(d) was passed, disallowing ₹7.35 crore in expenses and initiating reassessment under Section 148.
The High Court noted that the initial show cause notice did not include allegations regarding the non-existence of M/s. Zhonghua (India) Eng. Pvt. Ltd., depriving the petitioner of an opportunity to respond. Citing Sahara India (Firm) vs. CIT (2008) 14 SCC 151, the court reiterated that natural justice principles apply to tax proceedings unless explicitly excluded by law. It also referred to Grindlays Bank Plc. v. CIT (1990 SCC OnLine Cal 396), emphasizing that an AO cannot reopen a concluded assessment unless statutory conditions are met.
