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TMI Blog2025 (3) TMI 813X X X X Extracts X X X X X X X X Extracts X X X X ..... e which stands raised, we at the outset, deem it apposite to take note of the principal reasoning which underlay the initiation of reassessment action in the second round. From the reasons which have been placed on the record and which are stated to have formed the bedrock for formation of opinion that income had escaped assessment, the Assessing Officer [AO] has essentially based its conclusions on the affairs of NDTV Networks PLC UK [NNPLC] and other subsidiaries of the assessee and the funds that were raised overseas. The reasons recorded read thus:- "44. As discussed above, it is a matter of record that the assessee had an asset in the form of financial interest in the NNPLC located outside India and had signed an underwriter agreement to allegedly raise Rs. 405.09 crores, source of which was not proved from credible sources and accordingly unexplained deposit of Rs. 405.09 crore was income of the assessee through its hundred percent subsidiary the NNPLC. Taking into account, the concurrent findings of the AO, DRP and ITAT reached in A Y 2009-10 that floating of subsidiary companies by the assessee outside India and raising money through loss making companies were actually sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght to file and contest a review petition in the Hon'ble Supreme Court against the final judgment and order dated 03.04.2020 in Civil Appeal No. 1008 of 2020 in accordance with law and the present proceedings will be subject to the final outcome of the review petition of the department." 3. The allegations which are essentially levelled are more or less similar to those which obtained in the first round of litigation which ensued inter partes. This becomes apparent from the following facts which were noted by the Supreme Court itself in New Delhi Television:- "6. The assessing officer relies upon the order of the DRP holding that there is reason to believe that funds received by NNPLC were actually the funds of the assessee. It was specified that NNPLC had a capital of only Rs.40 lakhs. It did not have any business activities in the United Kingdom except a postal address. Therefore, it appeared to the assessing officer that it was unnatural for anyone to make such a huge investment of $100 million in a virtually non-functioning company and thereafter get back only 72% of their original investment. According to the assessing officer "The natural inference could be that it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... functioning company and the natural inference thereof being that it was the petitioner's own funds which had been introduced in the wholly owned subsidiary in the garb of bonds which had come to be issued. 5. The petitioner challenged the first round of reassessment before this Court in W.P(C) 11638/2015 which came to be dismissed on 10 August 2015. It was aggrieved by the aforesaid judgment handed down on that writ petition that led to the institution of the appeal before the Supreme Court. 6. The Supreme Court, as would be apparent from a reading of its decision in New Delhi Television, had proceeded to frame the following three principal questions which were found to arise:- "11. In our opinion, the following issues arise for consideration in this case:- (i) Whether in the facts and circumstances of the case, it can be said that the revenue had a valid reason to believe that undisclosed income had escaped assessment? (ii) Whether the assessee did not disclose fully and truly all material facts during the course of original assessment which led to the finalisation of the assessment order and undisclosed income escaping detection? (iii) Whether the notice dated 31.03.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings should be re-opened or not. Information which comes to the notice of the assessing officer during proceedings for subsequent assessment years can definitely form tangible material to invoke powers vested with the assessing officer under Section 147 of the Act. 23. The material disclosed in the assessment proceedings for the subsequent years as well as the material placed on record by the minority shareholders form the basis for taking action under Section 147 of the Act. At the stage of issuance of notice, the assessing officer is to only form a prima facie view. In our opinion the material disclosed in assessment proceedings for subsequent years was sufficient to form such a view. We accordingly hold that there were reasons to believe that income had escaped assessment in this case. Question No. 1 is answered accordingly." 8. Question (ii) and which pertained to whether the petitioner had made a full and true disclosure came to be answered in its favour as is evident from the following conclusions which the Supreme Court came to record:- "33. In our view the assessee disclosed all the primary facts necessary for assessment of its case to the assessing officer. What ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year: Provided also that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148. Explanation 4.-For the removal of doubts, it is hereby clarified that the provisions of this section, as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012." 10. The Second Proviso to Section 147 essentially was an embodiment of the intent of the Legislature to extend the power of reassessment even to cases where the assessee may have made a full and true disclosure. It was in the aforesaid context that the Second Proviso acted as an exception by stipulating that no part of the First Proviso would apply to a case where income in relation to any asset (including financial interest in any entity) located outside India chargeable to tax had escaped assessment. 11. The Supreme Court while dealing with the reliance which was placed on that provision by the Revenue ultimately came to observe as under:- "45. In our view this is not a fair or proper procedure. If n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and thus the provisions of Section 68 of the Act being attracted. It is these allegations which are then reiterated in Paras 44 to 48 of the reasons to believe and where the AO attempts to base the case on the Second Proviso to Section 147. 13. Mr. Jolly, learned senior counsel who led the challenge on the writ petition has firstly submitted that the Second Proviso to Section 147 itself could not have been invoked since there was no income of the writ petitioner which could have been traced to NNPLC. According to learned senior counsel, the allegations as levelled even if taken at their face value would only lead one to arrive at a conclusion that an asset was located outside India. According to Mr. Jolly, the reasons as recorded by the AO neither satisfy the test of income "in relation to any asset chargeable" or tax having escaped assessment in the concerned AY. 14. The second limb of the challenge was based on what Mr. Jolly submitted would clearly amount to a change of opinion. This submission was addressed in the backdrop of certain related proceedings which formed the subject matter of ITA No. 204/2020 and where the principal question was whether an undertakin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had found, qualified the test of full and true disclosure. 20. The Supreme Court had while affirming the formation of opinion had essentially held that the material which came to be disclosed in the subsequent years as well as the material placed on the record by minority shareholders constituted a sufficient basis for the formation of a prima facie opinion that income liable to tax may have escaped assessment. The remit made and the liberty granted was solely in light of the respondents having failed to place the petitioner on notice of their intent to invoke the Second Proviso to Section 147 and which pertained to the existence of a foreign asset and in such a situation, a power to reassess continuing to inhere notwithstanding a full and true disclosure having been made. 21. Those findings rendered by the Supreme Court clearly bind the parties including the writ petitioner here. The decision to reopen is itself based on the liberty which was granted by the Supreme Court and only placed the respondents under the obligation of informing the petitioner of their intent to invoke and reply upon the Second Proviso. 22. However, we are undoubtedly confronted by a clear and categoric ..... X X X X Extracts X X X X X X X X Extracts X X X X
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