A Division Bench of the Delhi High Court recently quashed several reassessment notices issued by the Assistant Commissioner of Income Tax (International Taxation) against Grid Solutions OY (LTD) for Assessment Years ( AYs ) 2013-14 to 2017-18. The court observed that reassessment proceedings could not be based on outdated or irrelevant facts obtained from prior years without establishing their relevance to the years under scrutiny.
The writ petitions filed by Grid Solutions OY (LTD), represented by Senior Advocate Mr. Ajay Vohra, challenged the reassessment actions under Section 148 of the Income Tax Act, 1961. These reassessments were initiated based on findings from surveys conducted in 2007 and 2019, coupled with conclusions from past judicial rulings involving the GE Group.
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The court noted that the Assessing Officer ( AO ) relied heavily on facts and findings from surveys and cases pertaining to different assessment periods. No new or pertinent material specific to AYs 2013-14 to 2017-18 was presented to justify the reassessments.
The assumption of the Assessing Officer that business models and circumstances remained unchanged across assessment years was deemed arbitrary.
The reasons provided for reopening assessments lacked factual grounding and amounted to mere suspicion rather than concrete belief. The court thus noted that reassessments under Section 147 of the Income Tax Act could only be justified if there was evidence that the assessee failed to disclose material facts or if new information came to light.
Grid Solutions OY (LTD) had fully disclosed its transactions and operations during the original assessments. The acceptance of these disclosures by AO further weakened the rationale for reopening.
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The Division Bench of the High Court hence reiterated the settled principle that each assessment year is independent, and conclusions drawn from one period cannot be extrapolated to another without substantive evidence.
Justice Yashwant Varma and Justice Harish Vaidyanathan Shankar concluded that the reassessment proceedings initiated were not legally tenable. Consequently, the notices for Assessment Years 2013-2018 issued under Section 148 of the Income Tax Act were quashed.
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