ACIT Vs Dalmia Cement (Bharat) Limited (Madras High Court)
Re-Assessments Possible even after concluded assessment u/s 153A: Madras High Court’s Landmark Ruling in ACIT v. Dalmia Bharat Ltd.
Overview: This is a significant tax law case concerning the reopening of income tax assessments beyond the normal limitation period of four years. The Division Bench of the Madras High Court comprising Justice G.R. Swaminathan and Justice M. Jothiraman reversed the Single Judge’s order and allowed the Income Tax Department to reopen assessments in what appeared to be a potential case of round-tripping of black money through a foreign entity.
Read SC Judgment: Reassessment Allowed Beyond Four Years for Non-Disclosure of Primary Facts: SC
Facts of the Case
The case involves three Dalmia group companies—DCBL, DBL, and Dalmia Power—and an investment by KKR Mauritius Cement Investment Ltd., which invested ₹500 crores in DCBL in 2010–11 for a 14.99% stake. In 2016, DBL bought back KKR’s shares for ₹1,218 crores (₹600 crores in cash and ₹618.75 crores in DBL shares), and KKR later sold these shares for ₹1,538 crores, earning total returns of ₹2,138 crores. The companies had already been assessed under Section 153A following a search in 2014–15. However, based on a Tax Evasion Petition (TEP) received on March 28, 2018, the Income Tax Department issued reassessment notices under Section 148 on March 31, 2018. The companies challenged the reopening, arguing it was impermissible after a completed 153A assessment. While the assessing officer rejected their objections, the High Court’s Single Judge allowed their writ petitions on October 30, 2019. The Revenue subsequently filed writ appeals. Key legal issues include the validity of reassessment under Section 148 post-search assessment under Section 153A, the use of a TEP as new material, potential change of opinion, and violation of natural justice.
