Allied Strips Limited Vs ACIT (Delhi High Court)
The Delhi High Court has set aside a notice issued by the Assistant Commissioner of Income Tax (ACIT) seeking to re-open the tax assessment of Allied Strips Limited for the Assessment Year 2007-08. The court, in its judgment, ruled that the reassessment proceedings, initiated more than four years after the relevant assessment year, were invalid on two primary grounds: they were based on a mere change of opinion by the tax authorities, and the mandatory pre-condition of alleging the assessee’s failure to fully and truly disclose material facts was not met.
The case involved the assessment of Allied Strips Limited for the financial year 2006-07 (Assessment Year 2007-08). The company had filed its return of income on November 16, 2007. The original assessment was subsequently taken up for scrutiny under Section 143(3) of the Income-Tax Act, 1961.
During the course of these scrutiny proceedings, the Assessing Officer (AO) issued a detailed questionnaire to Allied Strips Limited on July 15, 2009. This questionnaire included specific queries regarding share capital, loans, and other deposits received by the company during the year. Notably, question B.1 of the questionnaire specifically sought details about share application money introduced or taken during the year. It required the assessee to provide a list, along with the source, genuineness, and identity of the shareholders. The AO demanded confirmed copies of ledger accounts from the shareholders, including confirmation of the mode and date of payment, address, and even acknowledgement of their income tax returns, in addition to details of the source of funds and relevant bank entries.
