Vivo Mobile India Private Limited Vs ACIT & Anr (Delhi High Court)
Delhi High Court ruled in Vivo Mobile India Private Limited vs. ACIT & Anr that reassessment proceedings under Section 148A of the Income Tax Act were invalid due to a violation of natural justice. The case arose when tax authorities issued a notice under Section 148A(b) to Vivo Mobile India for the assessment year 2018-19, citing transactions with a non-existent entity, M/s. Zhong Mao (India) Pvt. Ltd. Vivo responded, clarifying that its transactions were actually with M/s. Zhonghu (India) Eng. Pvt. Ltd. However, without issuing a fresh notice regarding the alleged non-existence of this entity, the tax authorities proceeded with reassessment and disallowed expenses of ₹7.35 crores. The court held that since Vivo was never given a chance to respond to the claim of non-existence, the reassessment violated principles of natural justice.
The judgment emphasized that once an assessment is closed, it can only be reopened with proper jurisdiction and due process. The Delhi High Court relied on the Grindlays Bank Plc v. CIT precedent, which establishes that reassessment must be based on properly communicated material. Since Vivo was not informed about the claim that M/s. Zhonghu (India) Eng. Pvt. Ltd. was a bogus entity before reassessment, the court found the proceedings flawed. Consequently, the reassessment order and notice under Section 148 were quashed, though the revenue authorities retained the right to reinitiate proceedings following the correct legal procedure.
