Assessee's 7 crores Loan from Shell Company Added to u/s 68 of Income Tax Act: Delhi HC sets aside Reassessment Initiated Without Stating Valid Reason [Read Order]
![Assessees 7 crores Loan from Shell Company Added to u/s 68 of Income Tax Act: Delhi HC sets aside Reassessment Initiated Without Stating Valid Reason [Read Order]](https://www.taxscan.in/wp-content/uploads/2023/07/7-crores-Loan-Shell-Company-Income-Tax-Act-Delhi-Highcourt-Reassessment-Initiated-Without-Stating-Valid-Reason-Loan-from-Shell-Company-taxscan.jpg "Assessees 7 crores Loan from Shell Company Added to u/s 68 of Income Tax Act: Delhi HC sets aside Reassessment Initiated Without Stating Valid Reason [Read Order]")
The Delhi High Court set aside the reassessment against the addition of a 7 crores loan of the assessee from a shell company under section 68 of the Income Tax Act, 1961, in the absence of valid reason. Spirit Global Construction Pvt Ltd, Spirit Infradevelopers Pvt. Ltd. [SIDPL] and Spirit Infrastructure Pvt. Ltd [SIPL]. SGCPL had filed its Return Of Income [“ROI”]...
The Delhi High Court set aside the reassessment against the addition of a 7 crores loan of the assessee from a shell company under section 68 of the Income Tax Act, 1961, in the absence of valid reason.
Spirit Global Construction Pvt Ltd, Spirit Infradevelopers Pvt. Ltd. [SIDPL] and Spirit Infrastructure Pvt. Ltd [SIPL]. SGCPL had filed its Return Of Income [“ROI”] as Rs.1,04,98,240/-. On 04.06.2011, the said ROI was processed under Section 143(1) of the Income Tax Act, 1961[“the Act”].
The appellant/revenue conducted a search and seizure action under Section 132 of the Act against what is compendiously described as the K.J.S. Ahluwalia Group [“KJS Group”], which included cases involving another group going by the name Prabhatam Group.
The search and survey action brought to the fore certain incriminating material. The said material, according to the appellant/revenue, was suggestive of the fact that loans and advances had been received by SGCPL from certain shell companies which were a part of the KJS Group; the shell companies being: Tanish Tradecom Pvt. Ltd [“TTPL”], Puneet Oils and Chemicals Ltd [“POCL”].
The amount said to have been received, as a loan, from TTPL and POCL was Rs. 3.5 crores each i.e., a total of Rs. 7 crores, which was added under Section 68 of the Act; since, according to the Assessing Officer [“AO”], it constituted unexplained credit in the books of SGPCL.
Since reasons for issuing notice under Section 148 had not been furnished, on the very same date when the reply was filed i.e., 17.02.2014, the respondent/assessee asked to be furnished a copy of the reasons recorded for triggering assessment/reassessment proceedings against it.
Justice Rajiv Shakdher and Justice Tara Vitasta Ganju observed that the statutory [prerequisite] condition was not met by the AO before entering the realm of reassessment/assessment proceedings. The Court set aside the reassessment.
To Read the full text of the Order CLICK HERE
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