The Delhi High Court has refused to set aside the re-assessment notice issued by the Income Tax Department to Sky Light Hospitality, in which Robert Vadra is a partner, in connection with the DLF- Sky Light Hospitality land deal.
Sky Light had challenged the notice contending that it was now a limited liability partnership (LLP) and that the impugned notice was, in fact, issued to M/s Sky Light Hospitality Pvt. Ltd., a company which had ceased to exist on conversion to an LLP.
The I-T Department, on the other hand, had challenged the Petition, contending that the error in the name was a mere "irregularity and procedural lapse".
The Bench comprising Justice Sanjiv Khanna and Justice Chander Shekhar began by referring to the "reasons to believe" that income chargeable to tax has escaped assessment. It noted,
"Reference is made to the Tax Evasion Report received from the Investigation Unit of the Income Tax Department. Peculiar and specific details relating to transactions between the assessee and third party are mentioned...
After going through the reasons, we are satisfied that the “reasons to believe” show and establish a live link and connect with the inference drawn that income had escaped assessment, which is required for issuance of notice under Section 147/148 of the Act. Reasons to believe refer to several facts and information that had come to the knowledge and was available with the Assessing Officer."
The Bench observed that as long as the Assessing Officer forms an "honest and reasonable opinion", the Court should not interfere with the proceedings. It then asserted that this criteria is satisfied in the present case, observing,
"At this stage, when notice is issued under Section 147/148 of the Act, firm and conclusive findings are not required for merits would be examined and thereafter final finding recorded in the assessment order. As long as, there is an honest and reasonable opinion formed by the Assessing Officer and the “reasons to believe” are not mere “reasons to suspect”, the courts should not interject to stop the adjudication process and scrutiny on merits.
Absolute certainty is not required at the time of issue of notice and at the same time, “reasons to believe” must not be based on mere suspicion, gossip or rumor. The said test and criteria, we have no hesitation in holding, is satisfied in the present case."
The Court further opined that the notice being issued to the company and not the LLP was "an error and technical lapse" and thereby, directed the representatives of the LLP to appear before the Assessing Officer on 19 February.