BBC World News Ltd. vs. ADIT; (2014) 42 taxman. com 456 (Del):
For the A. Y. 2003-04, the assessment was completed by an assessment order u/s. 143(3) dated 24-03-2006. Subsequently, the assessment was reopened by a notice u/s. 148 dated 30-03-2010. The reasons for reopening are stated to be:
“The assessment order in the case was passed on 24-03-2006 wherein the Assessing Officer has held that the assessee has an agency PE in India in the form of BBC Worldwide (India) Private Limited (BWIPL). And attributed a loss of Rs. 69,42,475 to Indian activities. While perusing the records of the case, it is noticed that during the assessment proceedings the actual expenditure incurred on the activities related to the Indian operations were not submitted by the assessee. In the orders for A.Ys. 2004-05 to 2006-07, in the case of the assessee, it has been held that the global loss, if any, is not on account of activities of the assessee in India and such loss cannot be attributed to the PE of the assessee in India. It is therefore held that the statements furnished by the assessee showing loss from Indian activities do not represent the correct position and the same has been found not reliable.
The office believes that in the absence of such crucial information assessment of the income of the assessee for the A.Y. 2003-04 could not be completed properly….”
The Delhi High Court allowed the writ petition filed by the assessee and quashed the notice issued u/s. 148, inter alia for the reasons as under:
“i) There is a third reason why we think that the petitioner must succeed. Reasons to believe must have nexus and live link with the formation of opinion by the Assessing Officer that taxable income had escaped assessment. We have noted the reasons to believe mentioned above. As per mandate of section 149(1)(b), income escaping assessment should be or likely to exceed Rs. 1 lakh. This required prima facie computation of income escaping assessment. This in turn required examination of data or figures relating to “Indian operations”.
ii) If we accept the stand of the Revenue, then the said data and details were not available in the records for the assessment year 2003-04. It is not the contention of the Revenue that figures for the assessment year in question for the “Indian operation” were available in the records for subsequent or other years and were examined. Figures and data for every assessment will alter and change. This being the position and stand of the Revenue, the Assessing Officer could not have formed any prima facie or tentative opinion that income had escaped assessment as the petitioner had positive income from “Indian operations”, if we take into account “actual expenditure” incurred relating to Indian operations.
iii) In the absence of the said details, the averment made in the reasons to believe will be only a guess work or surmise and not cogent or reliable material to form a prima facie view. We understand that the Assessing Officers may be handicapped in such cases but there are sufficient provisions in the Act to get hold of the said data before proceedings are initiated or reasons are recorded. There is nothing to indicate and show the data and figures of the year in question were ascertained or gathered from records for other assessment years or otherwise.
iv) In view of the aforesaid, we allow the present writ petition and quash the reassessment proceedings initiated by issue of notice u/s. 148 dated 30th March, 2010 relating to assessment year 2003-04.
v) Copy of this order will be sent to the Chairman of Central Board for Direct Taxes for appropriate and necessary action to ensure proper record maintenance and issuance of suitable directions.”
