Case Law Details
Sahu Exports Vs ACIT (Delhi High Court)
Introduction: In a significant judgment, the Delhi High Court has quashed a reassessment order under Section 148 of the Income Tax Act in the case of Sahu Exports vs. ACIT. The petitioner challenged the notice and subsequent rejection of objections, asserting the absence of an independent application of mind by the Assessing Officer (AO). This article provides a detailed analysis of the judgment, highlighting key aspects and implications.
Detailed Analysis: The petitioner, Sahu Exports, contested a notice dated 29.03.2018 issued under Section 148 for Assessment Year 2011-12, challenging both the notice and the order rejecting objections. The petitioner contended that the AO lacked an independent application of mind and acted on borrowed satisfaction, relying on information from the Director of Income Tax (Inv.). The court scrutinized the facts, including the petitioner’s responses during the scrutiny assessment, where issues regarding unsecured loans were addressed.
The court noted that communications dated 12.03.2013 and 09.12.2013 from the Director of Income Tax (Inv.) provided information about purported accommodation entries received by Sahu Exports. Interestingly, despite these communications, reassessment proceedings were initiated only after a communication on 16.03.2018.
During the scrutiny assessment, the AO disallowed interest on unsecured loans but did not express an opinion on whether the loan was an accommodation entry. The court emphasized that the AO failed to inquire further, issue notices to relevant parties, or express a clear opinion on the material available.
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