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15-01-2019, BHARTI INFRATEL, Section 148, 147, 115JB, HIGH COURT OF DELHI
Bharti Infratel Limited (‗Petitioner/BIL‘, for short) by this writ petition impugns legality and validity of notice for re-assessment dated 31st March, 2015 issued under Section 148 read with Section 147 of the Income Tax Act, 1961 ('Act', for short) for the Assessment Year 2008-09. BIL has also challenged the order dated 23rd February, 2016 passed by the Assessing Officer, Deputy Commissioner of Income Tax, Circle-4(2), the first respondent to the writ petition, rejecting its objections to reopening of the assessment.
2. For convenience, it is observed and recorded that the Principal Commissioner of Income Tax is the second respondent to the present writ petition and that BIL is a company and a subsidiary of Bharti Airtel Limited (BAL, for short).
3. BIL in its return of income for the Assessment Year 2008-09 filed on 15th October, 2008 had declared a loss of Rs.157,27,09,173/- under the normal provisions and book profits of Rs.63,54,91,170/- under Section 115 JB of the Act. Revised return filed on 31st March, 2010 had enhanced the book profits to Rs. 63,89,40,500/-
4. Return for Assessment Year 2008-09 was taken up for scrutiny assessment vide issue of notices under Section 143(2) and 142 of the Act. Questionnaires were issued to which BIL had responded by furnishing details and documents which would be referred subsequently, culminating in the order of assessment dated 20th December, 2010 under Section 143(3) of the Act.
5. Thereafter, reassessment proceedings were initiated by the first respondent by issue of impugned notice under Section 148 read with Section 147 of the Act, which was served on BIL on 1st April, 2015. BIL by letter dated 8th April, 2015 had informed the assessing officer that the revised return filed by them on 31st March, 2010 may be treated as return filed in response to notice under Section 148 of the Act. By the same letter BIL had requested the first respondent to furnish copy of the 'reasons to believe' recorded for initiation of re-assessment proceedings. 'Reasons to believe' were furnished vide letter dated 13th April, 2015.
6. BIL had filed objections to reopening both on facts and law vide reply/objections dated 5th May, 2015 which, inter alia, had challenged assumption of jurisdiction under Section 147/148 of the Act.
7. The objections have been rejected by the first respondent by the impugned order dated 23rd February, 2016, resulting in filing of the present writ petition impugning the said order as well as notice dated 31st March, 2015 initiating re-assessment proceedings under Section 147/148 of the Act.
8. The relevant portion of the 'reasons to believe' recorded by the Assessing Officer for re-opening of assessment read as under :-
―During proceedings u/s 143(3) read with Section 263 of Income-tax Act, 1961 in case of M/s Bharti Airtel Ltd. for A.Y. 2008-09, it has been observed that M/s Bharti Airtel Ltd. (hereinafter referred to as ‗transferor‘) had transferred its telecom infrastructure assets worth Rs.5739.60 crores to its subsidiary company M/s Bharti Infratel Ltd. (hereinafter referred to as ‗transferee‘) on 31.01.2008 for Nil value under the Scheme of Arrangement approved by Hon‘ble Delhi High court. Further, as per scheme, the transferee company had revalued the said assets to Rs.8218.12 crores in the asset side of its Balance Sheet for the year ending on 31.03.2008 and the corresponding amount is added under General Reserves on the liability side of its Balance Sheet as per Part-III of the scheme of arrangement which clarified the accounting treatment in the books of transferee company. The relevant part of the scheme is reproduced as under:
Part III ISSUE OF SHARES AND ACCOUNTING TREATMENT IN THE BOOKS OF THE TRANSFEROR COMPANY AND THE TRANSFREE COMPANY