Facts of the Case

The petitioner, Experion Hospitality Pvt. Ltd., formerly known as Gold Resorts and Hotels Pvt. Ltd., is engaged in the business of real estate and hospitality development. For Assessment Years 2008-09 and 2011-12, the petitioner filed returns declaring losses, 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 investments received from a Singapore-based entity, Gold Hotels & Resorts Pte. Ltd., lacked creditworthiness and were routed through tax-haven jurisdictions.

Issues Involved

  1. Whether reassessment under Sections 147/148 was valid after expiry of four 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.
  4. Whether reassessment could survive when identical transactions were accepted in subsequent assessment years.

 

Petitioner’s Arguments

The petitioner contended that:

  • The original assessments were completed after due scrutiny and full disclosure of material facts.
  • The same foreign investor and identical share capital transactions were examined and accepted by the Revenue in subsequent assessment years.
  • Later assessments under Section 143(3) accepted the identity, creditworthiness, and genuineness of Gold Singapore.
  • Reopening after four years, without new tangible material, was legally impermissible and constituted a change of opinion.

 

Respondent’s Arguments

The Revenue argued that:

  • Reassessment was initiated based on fresh information from DIT (Intelligence & Criminal Investigation).
  • The foreign investor allegedly lacked sufficient business activity and creditworthiness.
  • Similar reassessment proceedings for later assessment years had earlier survived judicial scrutiny.
  • The complex routing of funds through multiple foreign jurisdictions justified reopening.

 

Court Order / Findings

The Delhi High Court held that:

  • Although reassessment notices for a later assessment year had earlier been upheld, the subsequent reassessment orders accepted the same transactions without any addition.
  • The identity, creditworthiness, and genuineness of Gold Hotels & Resorts Pte. Ltd. were conclusively accepted by the Revenue in later assessment years.
  • Once the Revenue itself accepted the transactions in completed assessments, the very foundation for reopening earlier years ceased to exist.
  • Reassessment proceedings cannot be sustained on suspicion when subsequent factual findings contradict the alleged escapement of income.

Accordingly, the Court quashed the notices issued under Section 148 and all consequential proceedings for the impugned assessment years.

 

Important Clarification

The Court clarified that:

  • Information from investigative agencies may justify reopening only if it continues to hold relevance.
  • Where subsequent assessments on identical facts accept the transactions as genuine, reassessment of earlier years becomes unsustainable.
  • Reopening cannot be based on conjecture, suspicion, or a mere change of opinion, especially after the statutory time limit of four years.

 Link to download the order - https://www.mytaxexpert.co.in/uploads/1770113468_EXPERIONHOSPITALITYPVTLTDEARLIERKNOWNASGOLDRESORTSANDHOTELSPVT.LTD..VsASSISTANTCOMMISSIONEROFINCOMETAXORS.pdf 

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