Friday, March 7, 2014

HC agrees to keep confidentiality of 2G spectrum report; non-disclosure to assessee won’t vitiate reassessment

The High Court held as under:
1)  The law only requires that the information on which the AO records his or her satisfaction that income has escaped assessment, is communicated to the assessee, without mandating the disclosure of any specific document;
2)  Where the reasons recorded had been communicated and it provided (independent of the 2G Report referred to in the reasons) details of the new and tangible information that support the AO's opinion, non-supply of 2G Spectrum report prepared by DIT(Inv) to the assessee on the grounds of confidentiality would not vitiate the proceedings initiated under section 147;
3)  There is no legal proposition that mandates the disclosure of any additional document. However, the AO could not, in all cases, refuse to disclose documents relied upon by him on account of confidentiality;
4)  The principle denying privilege or confidentiality would operate when no material is provided in addition to the mere assertion of the subjective satisfaction of the AO;
5)  Even then, the claim for privilege may still prevail in that the Court may consider the manner in which the documents were to be inspected, but such question did not arise in the instant case, where concrete and specific details (which supported the belief under section 147/148) were communicated to the assessee;

6)   Thus, the non-disclosure of the 2G Spectrum Report did not affect the impugned notice. - Acorus Unitech Wireless (P.) Ltd. v. ACIT [2014] 43 taxmann.com 62 (Delhi)

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