The Hon’ble Supreme Court of India in its recent judgement gave relief to appellant New Delhi Television Limited (NDTV) by quashing the notice issued by Income Tax department for the assessment year 2008-2009. The NDTV (Assessee) submitted a return for the financial year 2007-2008 i.e.. Assessment year (AY) 2008-2009 declaring a loss. The Assessee received a notice on 31.03.2015 from the Income tax authorities that they have reason to believe that the Assessee within the meaning of section 148 of the Income Tax Act 1961, has escaped the net income chargeable to tax for assessement year 2008-2009. But there was no reason cited in the said notice. Further, the Assessee asked for the reason and the same was provided that in the following assessment year i.e.. AY 2009-2010 a substantial amount of Rs. 624 crores were raised by the Assessee through its subsidiaries was a sham and bogus transaction for which income tax was not paid.
In reply to the said notice the Assessee claimed that there was no failure on their part in disclosing all the material facts and that the transaction of the step-up bonds was a legal and valid transaction. Further, it was also claimed that the assessing officer had treated these transactions to be genuine by levying guarantee fees and adding it back to the income of the Assessee. The Assessee also claimed that the abovementioned notice issued was beyond the limitation period of 4 years and the first part of proviso of Section 147 of the Act was not applicable herein the case.
The matter went up to the High Court which relying on the judgement in Phool Chands’s Case (supra) held that merely because the transaction of the convertible bonds were disclosed at the time of the original assessment does not mean that there is true and full disclosure of facts. The Hon’ble Supreme Court disagreeing to the High Court’s judgment observed that the disclosure by Assessee about the fact of issuance of convertible bonds, their redemption and all the other relevant facts were duly within the knowledge of the assessing officer.
The Hon’ble Supreme Court opined that the Assessee had fully and truly disclosed all the relevant facts for the assessment and held that the revenue is not eligible for the benefits provided under the first proviso of section 147 of the Act. Further the court held that though the notice issued to the Assessee showcase sufficient reason to believe but the revenue has failed to prove the non-disclosure of facts by the Assessee. The Hon’ble Supreme Court concluded to quash the notice issued after the period of four years. However, the court further stated that the revenue may issue a fresh notice taking benefit of second proviso of section 147, if it is so permissible by the law.