Summary
The Supreme Court quashed NDTV’s reassessment notice issued more than four years after the relevant assessment year. Subsequent assessment material supplied sufficient reason to believe income had escaped assessment, but the company had fully and truly disclosed the necessary primary facts. The Revenue could not introduce reliance on the foreign-asset proviso only when rejecting objections. A fresh notice invoking that proviso remained open if otherwise lawful, with all objections reserved.
Issues
- Whether later assessment material justified reason to believe escaped income.
- Whether failure of full and true disclosure permitted reopening beyond four years.
- Whether reliance on the foreign-asset exception could first be introduced when objections were rejected.
Provisions considered
- Section 147, main provision and first proviso, as applicable, Income Tax Act, 1961Fresh tangible material could justify belief, but the assessee’s full disclosure defeated the asserted basis for reopening beyond four years. (¶¶ 14, 22, 23, 26, 28, 29, 32, 33, 35, 44)
- Section 147, second proviso, as applicable, Income Tax Act, 1961Could not support this notice without fair notice of reliance on the foreign-asset exception and an opportunity to respond. Substantive applicability was left open. (¶¶ 36, 38, 40, 41, 42, 43, 44)
Held
- A detailed scrutiny assessment does not foreclose reopening on genuinely fresh material. Information discovered in subsequent assessment proceedings can supply tangible material and sufficient prima facie reason to believe escaped income, unlike a mere change of opinion. Genuineness of the disputed transaction was not finally decided. (¶¶ 12, 13, 14, 18, 21, 22, 23)
- The bond issue, subscribers, redemption and relevant details were disclosed or known to the assessing officer. The assessee’s duty was full and true disclosure of primary facts, not supplying the inferences the officer should draw. Later material justifying belief did not establish failure of the earlier disclosure duty. (¶¶ 26, 28, 29, 30, 31, 32, 33, 35)
- The Revenue could not orally reverse its position in the High Court affidavit that it was not relying on non-disclosure. Independently, the evidence established full and true disclosure, so the asserted six-year extended period was unavailable. (¶¶ 34, 35)
- An incorrect citation of power is not invariably fatal, but the assessee must not be prejudiced or surprised. Neither the notice nor furnished reasons put it on notice that the foreign-asset exception and sixteen-year period were invoked. Introducing that case only on rejection of objections denied a proper opportunity to answer it. (¶¶ 38, 39, 40, 41, 42, 43)
- The notice was quashed for being beyond four years without the required disclosure failure. Whether the foreign-asset exception substantively applied was expressly undecided; a fresh notice could issue if otherwise permissible, subject to all parties’ contentions. (¶ 44)
Result
Appeal allowed; impugned reassessment notice quashed. Liberty reserved for a fresh notice relying on the second proviso if otherwise lawful, with all validity objections open; pending applications disposed of.