R.K. Stockholding Private Ltd Vs ACIT (ITAT Delhi)
In a batch of two appeals concerning Assessment Years 2016-17 and 2017-18, the ITAT Delhi allowed the appeals filed by the assessee and held the reassessment orders to be illegal. The cases had been reopened on allegations that the assessee misused clients’ securities for obtaining loans for itself and group entities. During assessment proceedings, the Assessing Officer stated that ledger accounts, bank statements, and details of pledged securities could not be accessed and concluded that the securities had been misused.
The assessee consistently sought copies of the reasons recorded for reopening under Section 148 of the Income Tax Act, but the reasons were not supplied either during assessment proceedings or before the CIT(A). The assessee also argued that notices under Section 148, though dated 31.03.2021, were actually issued on 01.04.2021 as reflected on the ITBA portal. According to the assessee, reassessment proceedings initiated on 01.04.2021 required compliance with the new reassessment procedure, which had not been followed.
The Tribunal observed that the assessee had persistently requested the recorded reasons and relied on the decision in Jaggat Talkies, which followed the Supreme Court ruling in GKN Driveshafts. It held that failure to provide the recorded reasons rendered the reassessment orders invalid. The Tribunal further held that notices issued on 01.04.2021 attracted the amended reassessment regime, but the Assessing Officer continued under the unamended provisions. This was also held to be an illegality rendering the assessment orders null and void. Accordingly, both appeals were allowed.
