Delhi HC quashes Reassessment Order passed  after lapse of Four Years without applying Independent Mind by AO

The Delhi High Court invalidated the Assessing Officer's reassessment order that was issued after four years without using independent mind
Delhi High Court - Reassessment order - Akum Drugs And Pharmaceuticals - Writ petition - Income Tax - taxscan

In a significant case, the Delhi High Court quashed the reassessment order passed after the lapse of four years, emphasizing the Assessing Officer’s failure to apply an independent mind. The writ petition was filed by Akum Drugs And Pharmaceuticals Limited against the notice dated 02.08.2017 issued under Section 148 of the Income Tax Act for Assessment Year (AY) 2011-12.

The petitioner had filed its Return of Income (ROI) for the mentioned AY on 28.09.2011, which was selected for scrutiny. The assessment order under Section 143(3) of the Act was framed on 30.01.2014, accepting the petitioner’s ROI at Rs.37,15,44,272/-. Subsequently, a notice under Section 148 of the Act was issued after four years, alleging that the income chargeable to tax had escaped assessment.

Arvind Kumar, the petitioner’s counsel, argued that all material facts were fully and truly disclosed, questioning the justification for reassessment proceedings after a four-year lapse. Prashant Meharchandani, senior standing counsel for the respondent/revenue, defended the reassessment proceedings, relying on the reasons to believe set forth by the Assessing Officer.

The court observed that the reassessment proceedings were triggered based on audit objections, highlighting the Assessing Officer’s failure to apply an independent mind. After analyzing both parties’ facts and arguments, a division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia concluded that the petitioner had genuinely disclosed all material facts.

Consequently, the court quashed the reassessment order, emphasizing the Assessing Officer’s lack of independent consideration after the lapse of four years.

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