DCIT Vs Trans World International Ltd (Supreme Court of India)
The Supreme Court of India disposed of an appeal filed by the Revenue, the Deputy Commissioner of Income Tax (DCIT), challenging a Delhi High Court judgment that had set aside re-assessment orders and notices issued to Trans World International Ltd. (the assessee). The appeal was rendered unnecessary after the assessee’s counsel informed the Supreme Court that they would challenge the subsequent final order of assessment on its merits before the appropriate appellate forum, rather than continuing to argue the validity of the re-opening itself.
Background and High Court Ruling
The appeal stemmed from a judgment passed by the High Court of Delhi on August 14, 2024, in Writ Petition No. 16672/2022 and allied petitions. The High Court had allowed the assessee’s petition, thereby quashing the re-assessment order passed under Section 148A(d) and the notice issued under Section 148 of the Income Tax Act, 1961.
During the writ petition’s pendency, the High Court had permitted the assessment proceedings to continue but directed that any final order passed would not be given effect to and would be subject to the High Court’s eventual orders.
The Delhi High Court’s decision to quash the re-assessment action was primarily based on a judicial precedent, the case of Fox Network. The High Court’s operative part noted that in light of the law enunciated in Fox Network, there was “no justification to recognize a right inhering in the respondents [Revenue] to continue the impugned reassessment action.” Furthermore, the High Court found the Assessing Officer’s (AO) view—which questioned the bifurcation of revenue in a 95% and 5% ratio—to be “perverse in light of the stipulations contained in the agreement” between the parties.
