No Basis For Reassessment If Nature & Source Of Receipts Are Verified, AO Doesn't Find Any Contradictory Evidence: Delhi High Court
The Delhi High Court stated that once nature and source of receipts have been satisfactorily proved and AO has not contradicted information given by assessee, there lies no cause for initiating the reassessment action. The Division Bench of Justices Yashwant Varma and Ravinder Dudeja observed that “………Once the nature and source of receipts have...
The Delhi High Court stated that once nature and source of receipts have been satisfactorily proved and AO has not contradicted information given by assessee, there lies no cause for initiating the reassessment action.
The Division Bench of Justices Yashwant Varma and Ravinder Dudeja observed that “………Once the nature and source of receipts have been satisfactorily explained/proved and AO has not contradicted the explanation/information given by the assessee, there lies no cause for initiating the reassessment action for the impugned AYs 2008-09 & 2011-12”……..
Section 148 of the Income Tax Act, 1961 gives the Assessing Officer the power to reassess tax returns if income is inaccurately reported. Notice is sent under Section 148 or 148A for reassessment.
In this case, the Assessee/Petitioner filed return of income for the AY 2008-09. The return of income was accepted under Section 143(1) of the Income Tax Act, 1961. The Assessing Officer passed the Assessment Order under Section 143(3) without making any addition/disallowance to the returned income. However, the department/respondent No. 1 issued a notice under Section 148, indicating that income for the AY 2008-09 had escaped assessment.
The assessee subsequently raised objections to the reassessment proceedings, which were dismissed by the department. The assessee has challenged the notice issued by the department/respondent under Section 148 of the Income Tax Act, 1961 before the Delhi High Court.
The bench noted that the impugned reassessment proceedings had been initiated primarily for the reason that Gold Singapore does not appear to be carrying out any business activities in Singapore and has been floated to act as a conduit for further investments in Indian companies, but in the assessment order, the Assessing Officer has accepted the transaction of share application money/share capital received from Gold Singapore without any addition in that regard and also accepted the status of the holding company i.e. Gold Singapore.
The bench observed that the identity and creditworthiness of Gold Singapore and the genuineness of the transaction has been accepted by the Department while framing assessments for AY 2012-13, 2015-16 and 2020-2021. The transaction of investment of share capital in the petitioner company has been duly examined in subsequent assessment years and accepted in completed assessments/reassessments under Section 143(3) of the Act.
“Once the nature and source of receipts have been satisfactorily explained/proved and AO has not contradicted the explanation/information given by the assessee, there lies no cause for initiating the reassessment action for the impugned AYs 2008-09 & 2011-12,” added the bench.
In view of the above, the bench opined that the reasons for initiation of the assessment proceedings do not survive and accordingly quashed the proceedings.
Counsel for Petitioner/ Assessee: S. Ganesh
Counsel for Respondent/ Department: Sunil Agarwal
Case Title: Experion Hospitality Pvt. Ltd. v. Income Tax Officer & Ors.
Citation: 2024 LiveLaw (Del) 1206
Case Number: W.P.(C) 10542/2015