In the case of Sky Light Hospitality LLP vs Assistant Commissioner of Income Tax, the Supreme Court dismissed the special leave petition filed by the Sky Light Hospitality LLP firm linked to Mr. Robert Vadra, challenging the notice issued by the Income Tax Department for reassessment of its profits from the land deals in Haryana and Rajasthan in 2010-2011.
Earlier in February, the High Court of Delhi had rejected the plea of the petitioner, challenging the Income Tax Notice. The petitioner had challenged the notice in Delhi High Court upon the contention “reasons to believe” were mere reasons to suspect and do not establish that income had escaped assessment. The firm also argued that the notice was issued to M/s Sky Light Hospitality Pvt. Ltd and the such a company had ceased to exist on conversion to a Limited Liability Partnership (LLP). The Revenue defended its action by arguing that the error in the name was only an “irregularity and procedural lapse”.
The High Court Bench of Justice Sanjiv Khanna & Justice Chander Shekhar had observed “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…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 rumour. The said test and criteria, we have no hesitation in holding, is satisfied in the present case”
The high court also said that as long as there was an “honest and reasonable opinion” formed by the assessing officer and the “reasons to believe” are not mere “reasons to suspect”, courts should not interject to stop the “adjudication process and scrutiny on merits.”
The Supreme Court Bench comprising of Justice A.K. Sikri and Justice Ashok Bhushan refused to interfere with the order of Delhi High Court, which had asked the Petitioner to join proceeding before the Assessing Officer.
“In the peculiar facts of this case, we are convinced that wrong name given in the notice was merely a clerical error which could be corrected under Section 292B of the Income Tax Act. The special leave petition is dismissed. Pending applications stand disposed of.” read the order.
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