Delhi High Court Stays Reassessment Order Against IBIBO Group

The Delhi High Court has stayed the reassessment order against an online travel agent, IBIBO Group, and issued a notice to the income tax department.

"The Assessing Officer is permitted to pass the reassessment order, yet the same shall not be given effect to and shall be subject to further orders to be passed by this Court," the division bench of Justice Manmohan and Justice Manmeet Pritam Singh Arora ordered.

The petitioner, the IBIBO group, challenged the order passed under Section 148A(d) of the Income Tax Act, 1961, and the notice issued under Section 148 for AY 2014–15.

The petitioner stated that there exists no information that suggests income chargeable to tax has escaped assessment. The petitioner has not claimed any deduction on account of alleged service tax collected from its customers in its return of income (ROI) for the subject year, and therefore, Section 43B has no application. The liability to deposit service tax collected from customers with respect to hotel bookings is on the hotel as the provider of service. The petitioner has always acted in the capacity of an online travel agent engaged in the business of facilitating hotel rooms on behalf of the hotel.

The petitioner stated that the department has made an incorrect statement in relation to the business model of the petitioner by stating that the petitioner is engaged in the business of renting hotel rooms to final customers. The petitioner contended that the statement was contrary to the original assessment order.

The petitioner emphasised that the petitioner's ROI has been subjected to detailed scrutiny during the course of assessment proceedings under Section 143(3). The business model of the petitioner company had been duly examined by the department. There was a specific question on the issue during the course of the original scrutiny assessment, and thus the reopening was based on a change of opinion.

The petitioner issued the notice to the department and listed the matter for hearing on May 18, 2023.

Case Title: IBIBO Group Pvt. Ltd. Versus DCIT

Citation: 2022 LiveLaw (Del) 1078

Date: 10.11.2022

Counsel For Petitioner: Advocates Salil Kapoor, Sumit Lalchandani, Tarun Chanana & Ananya Kapoor,

Counsel For Respondent: Senior Standing Counsel Sanjay Kumar

Click Here To Read Order