Demas Developers Private Limited Vs ITO (ITAT Delhi)
Reassessment Quashed Because AO Relied Solely on Investigation Wing Report; Reopening Invalid Because Reasons Were Based on Borrowed Satisfaction; Shell Company Allegation Rejected Because Assessee Owned Substantial Land Assets.
The case concerned reassessment proceedings initiated against a real estate development company for Assessment Year 2012-13. The company, incorporated on 06.07.2010, was engaged in real estate development, including ownership, development, and maintenance of real estate. The relevant year was only its second year of operations.
The reassessment was triggered after information was received from the Investigation Wing alleging that the company had received and transferred substantial funds and was functioning as a paper or shell company engaged in providing accommodation entries. The Investigation Wing noted that the company had negligible turnover and profits, significant unsecured loans, and substantial bank transactions. Based on this information, the Assessing Officer (AO) concluded that the company had no genuine business activity, treated it as a shell entity, and formed a belief that income of ₹73.38 crore had escaped assessment. A notice under Section 148 was issued on 31.03.2019.
During reassessment proceedings, the AO ultimately made additions of ₹108 crore under Section 68 on the ground that the assessee failed to establish the creditworthiness of lenders from whom unsecured loans had been received.
