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2024 (7) TMI 1568 - HC - Income TaxReopening of assessment u/s 147 - diversion of the loan to sister concerns - petitioner impugned the exercise of the assessment which came to be continued post the rendering of the judgment in Ashish Agarwal 2022 (5) TMI 240 - SUPREME COURT in terms of a Section 148A(b) HELD THAT - We find ourselves unable to sustain that challenge bearing in mind the fact that the credible information which constituted the bedrock for the formation of opinion had categorically alluded to the aforesaid transactions, namely, the alleged diversion of the loan to sister concerns. The direction of the Court was to carry out an exercise of examining the explanation as proffered by the petitioner afresh. In that view of the matter, we are of the opinion that the AO was clearly not disabled from proceeding to examine the entire case including on the basis of the allegations which formed part of para 2.5 of the original reasons to believe . Consequently, we find no merit in the challenge which stands raised. The writ petition fails, and stands dismissed.
Issues:
Challenge to assessment under Section 148 of the Income Tax Act, 1961 post a specific judgment by the Supreme Court in a different case. Analysis: The writ petition challenged the assessment proceedings initiated under Section 148 of the Income Tax Act, 1961, after a judgment by the Supreme Court in a different case. The petitioner sought various reliefs, including quashing of notices and orders issued under different sections of the Act for the Assessment Year 2016-17. The initiation of proceedings was based on information received regarding alleged non-compliance with VAT registration, work contract tax liabilities, diversion of loans, and non-disclosure of income. The Assessing Officer (AO) formed a reason to believe that income had escaped assessment due to non-disclosure of liabilities and diversion of funds. The petitioner contended that the assessment was invalid as it did not consider the alleged diversion of funds as the basis for escaping income assessment. The High Court examined the challenge and found that the specific contention regarding the diversion of funds was not ruled upon by the AO. Consequently, the Court allowed the writ petition, setting aside the order under Section 148A(d) and directing the AO to conduct a fresh assessment. The petitioner argued that since the diversion of funds was not the foundation for escaping income assessment, the orders were unsustainable. However, the Court noted that the credible information forming the basis for the assessment did include the alleged diversion of funds. Therefore, the AO was not precluded from examining the case based on these allegations. Ultimately, the Court found no merit in the challenge raised by the petitioner. The writ petition was dismissed, but the order was issued without prejudice to the rights and contentions of the parties involved. The judgment upheld the validity of the assessment proceedings initiated under Section 148 of the Income Tax Act, 1961, based on the information received regarding non-disclosure of liabilities and diversion of funds, directing a fresh assessment to be conducted by the AO.
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