Case Law Details
Aadi India Private Limited Vs ACIT (Delhi High Court)
Introduction: In a recent legal development, the Delhi High Court has set aside an assessment order in a case involving allegations of non-current investments made in share application money. The court’s decision comes as a response to a challenge laid by Aadi India Private Limited against various notices and orders issued by the tax authorities for the Assessment Year (AY) 2019-20.
1. Initial Allegations: The case began with a notice dated 23.02.2023 issued under Section 148A(b) of the Income Tax Act, 1961 (the Act). The primary allegation against Aadi India Private Limited was related to unexplained credits in its bank account amounting to Rs.1,33,89,087. These credits were associated with transactions with three entities: M.K. Traders, Luxmi Agencies, and Lucky Traders.
2. Response by the Assessee: Aadi India Private Limited responded to the notice, stating that it had not engaged in any transactions with the mentioned entities. The company claimed to have appended bank statements from Indian Bank and ICICI Bank to its reply as evidence.
3. Shifting Goalposts: Despite the company’s response, the Assessing Officer (AO) issued an order on 31.03.2023 under Section 148A(d) of the Act, which changed the nature of the allegations. The AO now alleged that the company had failed to explain investments made in the unquoted shares of Mahavir Transmission Ltd. This new allegation was not part of the initial notice under Section 148A(b) of the Act.
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