Delhi High Court rejects Vadra-linked firm's plea against IT Dept reassessment notice

The Delhi High Court has rejected the plea of a Delhi-based hospitality firm linked to Robert Vadra challenging an Income Tax (IT) Department notice for reassessment of its profits from land deals in Haryana and Rajasthan for the years 2010-11.

The I-T department, in a tax evasion report tabled before the high court, had said that it had reasons to believe that over Rs 35 crore, earned by the firm in 2010-11, "had escaped from assessment".

A bench of justices Sanjiv Khanna and Chander Shekhar, taking note of the tax evasion report, said, "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."

The court also directed the firm, Sky Light Hospitality LLP, to join proceedings before the assessing officer on February 19.

The firm, in its plea challenging the I-T department's notice, had contended that the "reasons to believe"



were mere reasons to suspect and do not establish that income had escaped assessment.

Disagreeing with the firm's contention, the bench said that "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".

"There is evidence and material on record to justify issue of notice," it said and added that as long as there was a "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".

The bench also rejected the firm's plea that the notice was sent by the I-T department to the wrong entity - Sky Light Hospitality Pvt Ltd - instead of Sky Light Hospitality LLP, saying "there was no doubt and debate that the notice was meant for the petitioner and no one else".