Facts of the Case

The petitioners, belonging to the Experion Group and engaged in real estate development, filed returns of income for Assessment Years 2008-09 and 2011-12, which were either accepted under Section 143(1) or assessed under Section 143(3) of the Income Tax Act, 1961.

Subsequently, the Revenue issued notices under Section 148 seeking to reopen completed assessments based on information received from the Directorate of Intelligence & Criminal Investigation (DIT), alleging that substantial investments received from a Singapore-based entity, Gold Hotels & Resorts Pte. Ltd., were routed through tax havens and lacked creditworthiness. Objections filed by the assessees were rejected, leading to the filing of writ petitions before the Delhi High Court.

 

Issues Involved

  1. Whether reassessment proceedings under Section 147/148 were valid when the same material was examined and accepted in subsequent assessment years.
  2. Whether reopening based on DIT information amounted to a mere change of opinion.
  3. Whether the condition of “failure to disclose fully and truly all material facts” was satisfied after expiry of four years.
  4. Whether alleged doubts regarding creditworthiness and genuineness survived in light of later assessments accepting the transactions.

 

Petitioners’ Arguments

The petitioners contended that:

  • The impugned reassessment notices were based on identical material that had already been examined in later assessment years.
  • The Revenue had accepted the identity, creditworthiness, and genuineness of the same foreign investor in assessments for AYs 2012-13, 2015-16, and 2020-21.
  • There was no failure on the part of the assessees to disclose material facts during the original assessments.
  • Reopening after four years without new tangible material was impermissible and amounted to a change of opinion.

 

Respondents’ Arguments

The Revenue argued that:

  • Reassessment was initiated on the basis of fresh and specific information received from DIT (Intelligence & Criminal Investigation).
  • Similar reassessment proceedings for AY 2012-13 had earlier been upheld by the Delhi High Court, and the SLP against that decision had been dismissed by the Supreme Court.
  • The complex routing of funds through multiple foreign entities justified reopening to examine genuineness and source of investments.

 

Court Order / Findings

The Delhi High Court held that:

  • Although reassessment notices for AY 2012-13 had earlier survived judicial scrutiny, subsequent reassessment orders had accepted the very same transactions without making any addition.
  • The identity and creditworthiness of Gold Singapore and the genuineness of the share capital transactions had been conclusively accepted by the Revenue in later years.
  • Once the nature and source of receipts were examined and accepted in subsequent completed assessments, the foundational basis for reopening earlier years ceased to exist.
  • Reassessment proceedings for AYs 2008-09 and 2011-12 were therefore unsustainable.

Accordingly, the Court quashed the impugned notices issued under Section 148 and all proceedings pursuant thereto.

 

Important Clarification

The Court clarified that while information from investigative agencies may constitute tangible material at the stage of reopening, such material cannot survive judicial scrutiny where:

  • The same issue has been examined in subsequent years,
  • The Revenue itself has accepted the transactions as genuine, and
  • No contrary finding or adverse material exists thereafter.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770113362_EXPERIONDEVELOPERSPVTLTDSUCCESSORININTERESTOFERSTWHILEEXPERIONDEVELOPERSINTERNATIONALPVT.LTD.VsASSISTANTCOMMISSIONEROFINCOMETAXCIRCLE8ORS..pdf 

 

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