Back
IN THE HIGH COURT OF DELHI AT NEW DELHI
Manmohan, Dinesh Kumar Sharma, JJ.
Divya Capital One Private Limited - Appellant
Versus
Assistant Commissioner Of Income Tax Circle - Respondent
W.P.(C) 7406 of 2022
Decided On : 12-05-2022
Income Tax Act - Challenging Notice under Section 148A(b) and Order under Section 148A(d) - Summary of Acts and Sections: Income Tax Act, 1961, Sections 147 to 151, Explanation 1 to Section 148, Section 148A(b), Section 148A(d) - The court discussed the amended re-assessment scheme introduced by the Finance Act, 2021, the interpretation of 'information' in Explanation 1 to Section 148, and the violation of principles of natural justice in the issuance of notices and orders under the Act.
Fact of the Case:
The petitioner challenged the Notice dated 17th March, 2022 issued under Section 148A(b) of the Income Tax Act, 1961, as well as the Order dated 04th April, 2022 passed by the Assessing Officer under Section 148A(d). The petitioner contended that the impugned order was arbitrary and without proper consideration of the petitioner's responses.
Finding of the Court:
The court found that the new re-assessment scheme was introduced to reduce litigation and promote ease of doing business. It also found that the impugned notice and order were cryptic, and the petitioner was denied an effective opportunity to file a reply. The court also noted that the petitioner was not given reasonable time to file a reply and that the mandate of Section 148A(c) had been violated.
Issues: The issues included the arbitrary nature of the impugned order, the violation of principles of natural justice, and the denial of an effective opportunity for the petitioner to respond.
Ratio Decidendi: The court held that the new re-assessment scheme aimed to reduce litigation and promote ease of doing business. It also emphasized the importance of providing an effective opportunity for the petitioner to respond and the violation of principles of natural justice.
Final Decision: The impugned order and notice were quashed, and the matter was remanded back to the Assessing Officer for a fresh determination.
JUDGMENT
Manmohan, J. (Oral). - C.M.No.22640/2022
Exemption allowed, subject to all just exceptions.
Accordingly, the application stands disposed of.
W.P.(C) No.7406/2022 & C.M.No.22639/2022
1. Present Writ Petition has been filed challenging the Notice dated 17th March, 2022 issued under Section 148A(b) of the Income Tax Act, 1961 ('the Act') as well as the Order dated 04th April, 2022 passed by the Assessing Officer under Section 148A(d) and the consequential impugned notice dated 04th April, 2022 issued under Section 148 of the Act.
2. Learned counsel for the Petitioner contends that the impugned Order dated 04th April, 2022 under Section 148A(d) has been passed without considering the replies dated 24th March and 31st March, 2022 filed by the Petitioner to the show cause notice. He states that the petitioner filed a preliminary response to the above said show cause notice whereby the petitioner objected to the legal validity of the notice under Section 148A(b) on the ground that there was no information that suggested that income had escaped assessment. The petitioner further requested respondent No.1 to provide the information/documents, relied upon for assuming jurisdiction, which suggest that income had escaped assessment and further requested a week's time from date of sharing such information so that the petitioner could file a detailed para wise response. Although the information requested for was not shared with the petitioner, yet the petitioner filed a detailed para wise response dated 31st March, 2022 in respect of each of the transaction stated by the respondent in the show cause notice dated 17th March, 2022. The petitioner further submitted voluminous documentary evidences along with the said reply.
3. He further states that the impugned order is arbitrary, cryptic and without application of mind as a huge sum of Rs.10,07,05,88,04,543/-(Rupees One lakh seven hundred and five crores eighty-eight lakhs four thousand five hundred and forty-three only) is held to have escaped assessment without considering the return and business of the Petitioner. He states that there is no proper indication as to how income has escaped assessment. In this regard, he relies upon a tabular chart capturing parawise reasons recorded and the remarks in respect thereof as under:-
Para no. of order u/s 148A(d) | Remarks |
Para 2 Under para 2, at page no. 1 to page no.3 of the order, a table is provided which captures the list of transactions entered into by the Petitioner such as purchase of shares, sale of futures, sale of shares, purchase of mutual funds, sale of options, etc. The total of such table is Rs.10,07,05,88,04,543 | There is no allegation/comment as to what is wrong with such transactions. The Petitioner is a member of National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) and these transactions are routine transactions carried out in the ordinary course of business of the petitioner considering the fact that the Petitioner is carrying business of share brokers, depository participant and investment in securities and trade in derivatives. Further, all these transactions are duly accounted for in the profit and loss account and return filed by the Petitioner. |
Para 3 At para 3 page 3-4 of the order, a table is provided which captures some purchases made by the Petitioner to the tune of Rs.13,08,95,220. | This information is culled out from GST returns. There is no allegation/comment as to what is wrong with such transactions and how income has escaped assessment. In any case, these transactions are carried out in the ordinary course of business and duly accounted for in the profit and loss account and return filed by the Petitioner |
Para 4 At para 4, a table is provide which captures details of certain receipts / payments/ receipts to the tune of Rs.20,95,64,704 on account of payments to contractors / professionals, payment of salary, interest income other than interest on securities etc. | These details have been culled out from TDS returns. T |
The central legal point established in the judgment is the interpretation of the amended re-assessment scheme introduced by the Finance Act, 2021, and the importance of upholding principles of natura....
The court held that the Assessing Officer's failure to consider the petitioner's detailed replies before passing the reassessment order violated procedural justice under the Income Tax Act.
The main legal point established in the judgment is the significance of adhering to the procedure prescribed under Section 148A of the Income Tax Act, 1961 before initiating reassessment proceedings.....
Under section 147 of the Act the proceedings for the reassessment can be initiated only if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any....
The court upheld the authority of the Assessing Officer to reassess income under amended provisions of the Income Tax Act, reinforcing that objections can be addressed during reassessment proceedings....
Assessment under Income Tax requires concrete information indicating escapement of income, which was absent in this case, rendering notices invalid.
The court established that the discretionary nature of inquiries under Section 148A does not mandate a personal hearing or exhaustive justification for the Assessing Officer's decisions.
Reassessment under Income Tax Act is impermissible on issues already addressed in a completed assessment, as it constitutes a change of opinion without new material evidence.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
