UK Grid Solutions Limited Vs ACIT (Delhi High Court)
Delhi High Court has set aside reassessment proceedings initiated by the income tax authorities against UK Grid Solutions Limited for Assessment Years 2013-14 and 2014-15. The court found that the reasons cited for reopening the assessments were based on findings from income tax surveys conducted on various constituents of the GE Group in India in 2007 and 2019, without demonstrating a specific application of mind to the facts relevant to the assessment years under challenge.
Read SC Judgment in this case: SC Dismisses Revenue’s SLP Due to Delay & Lack of Year-Specific Material in Reassessment
The judgment was delivered in two writ petitions filed by UK Grid Solutions Limited challenging the reassessment action. One petition pertained to proceedings initiated under the reassessment regime that existed prior to the amendments brought in by the Finance Act, 2021, while the other related to proceedings initiated under the new procedure prescribed by Section 148A(b) of the Income Tax Act, 1961.
The factual background, as noted by the court, revealed that the basis for initiating the reassessment was intelligence or findings derived from surveys conducted on other entities belonging to the broader GE Group in 2007 and 2019. Tax authorities often rely on information gathered during surveys or searches on one entity to initiate action against related entities if the findings suggest potential tax evasion or escaped income. In this instance, the income tax department appeared to be extrapolating the findings from the GE Group surveys to the case of UK Grid Solutions Limited for the assessment years 2013-14 and 2014-15.
