Interest-free loans from Videocon's diverted bank funds not valid grounds to reassess income of recipient entities under Section 147

HC quashed reassessment proceedings initiated under s.147 against investment entities Top Most Investment, YK Securities, and Glider Investment. While Videocon Industries allegedly diverted bank financing to provide interest-free loans to these entities, the Court found no valid basis to conclude that income had escaped assessment in the recipients' hands. The reassessment notice under s.148A(b) and subsequent order under s.148A(d) failed to establish, even prima facie, how such fund diversion could lead to escaped income for the recipient entities. At most, this could have impacted interest deduction claims by Videocon, but provided no grounds for reopening assessment of the loan recipients. .....

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