RRPR Holdings Private Limited Vs DCIT (Delhi High Court)
The Delhi High Court examined a writ petition challenging the initiation of reassessment proceedings for Assessment Year 2010–11 under Section 148 of the Income-tax Act. The petitioner sought quashing of the notice dated 23 March 2015 and subsequent order rejecting objections, along with a prohibition on further reassessment and inquiries. The reassessment was based on allegations relating to a transaction involving acquisition of shares and a loan agreement. It was stated that the petitioner had acquired 7.5% shareholding in a company using loan proceeds obtained under an agreement dated 21 July 2009, which were used to repay outstanding loans to a bank. The Assessing Officer alleged that the loan was effectively consideration for transfer of 26% shares.
Read SC Judgment in this case: SC Dismisses Tax Department Appeal Due to Delay, Upholds Quashing of Reassessment Notice
Upon examination, the Court found that this foundational allegation was factually incorrect. It was acknowledged that the shares acquired by the petitioner continued to be held in its own name and had never been transferred to the lender entity. Since the reassessment proceedings were based on an incorrect factual premise, the Court held that the initiation of reassessment could not be sustained. Accordingly, the notice issued under Section 148 was quashed.
