PCIT Vs South Delhi Promoters Ltd. (Delhi High Court)
The Delhi High Court dismissed the Revenue’s appeal against an order of the Income Tax Appellate Tribunal relating to Assessment Year 2007–08, thereby affirming the deletion of an addition of ₹16.88 crore made under Section 68 of the Income-tax Act, 1961. The addition pertained to share application money received by the assessee. Earlier, the Commissioner of Income Tax (Appeals) had deleted the addition on merits, which was upheld by the Tribunal.
The Tribunal had also allowed the assessee’s cross objections challenging the jurisdiction of reassessment proceedings initiated under Sections 147/148. It found that the original assessment under Section 143(3) had involved detailed scrutiny of share capital, share premium, and unsecured loans. The Assessing Officer had examined the identity, genuineness, and creditworthiness of the share applicants, including recording statements of certain applicants.
The reassessment notice issued after more than four years relied on information from the Investigation Wing alleging accommodation entries linked to the S.K. Jain Group. However, the Tribunal found that none of the 99 share applicants were identified as accommodation entry providers and that the Assessing Officer failed to independently apply his mind or establish a link between the assessee and alleged entry operators. Crucially, the reasons for reopening did not record any failure on the part of the assessee to disclose fully and truly all material facts, a mandatory requirement under the first proviso to Section 147.
