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IN THE HIGH COURT OF DELHI AT NEW DELHI
Rajiv Shakdher, Girish Kathpalia, JJ.
Ravina Bansal – Appellant
Versus
Income Tax Officer Ward 29(1) & Anr. – Respondents
W.P.(C) 6283 of 2023
Decided On : 15-05-2023
Income Tax Act - Assessment Year 2014-15 - The court directed the Assessing Officer to verify the petitioner's assertion before passing an assessment order and accord a personal hearing to the petitioner.
Fact of the Case:
The petitioner challenged the order passed under Section 148A(d) of the Income Tax Act and the consequential notice issued under Section 148 of the Act, as well as other related notices and instructions.
Finding of the Court:
The court disposed of the writ petition with a direction for the Assessing Officer to verify the petitioner's assertion before passing an assessment order and accord a personal hearing to the petitioner.
Issues: Challenge to order under Section 148A(d) of the Income Tax Act, consequential notice under Section 148, notice under Section 148A(b), and challenge to CBDT instruction.
Ratio Decidendi: The petitioner's assertion regarding the alleged transactions needed to be verified before passing an assessment order.
Final Decision: The writ petition was disposed of with a direction for the Assessing Officer to verify the petitioner's assertion before passing an assessment order and accord a personal hearing to the petitioner.
JUDGMENT
Rajiv Shakdher, J. (Oral)
CM APPL. 24650/2023
1. Allowed, subject to just exceptions.
W.P.(C) 6283/2023 and CM APPL. 24649/2023 [Application filed on behalf of the petitioner seeking interim relief]
2. This writ petition concerns Assessment Year (AY) 2014-15.
3. The petitioner/assessee has assailed via the instant writ petition, the order dated 21.07.2022 passed under Section 148A(d) of the Income Tax Act, 1961 [in short, "Act"] and the consequential notice of even date i.e., 21.07.2022 issued under Section 148 of the Act.
3.1. Besides this, challenge is also laid to the notice dated 29.05.2022 issued under Section 148A(b) of the Act.
3.2. In addition thereto, there is also a challenge laid to Instruction No.1 of 2022 dated 11.05.2022, issued by the CBDT.
4. Ms Ananya Kapoor, learned counsel, who appears on behalf of petitioner/assessee, fairly concedes that no response was submitted by the petitioner/assessee to the aforementioned notice issued under Section 148A(b) of the Act.
4.1. Ms Kapoor's contention is that a reply was filed on 30.04.2023. In this context, Ms Kapoor draws our attention to Annexure P-16 appended on page 117 of the case file.
5. It is Ms Kapoor's contention that the Case Related Information Detail (CRID) furnished along with notice issued under Section 148A(b) of the Act, refers to the following transactions:
| Dayanand Singh | Rs.33,81,000/- |
| Lifeline Securities Ltd. | Rs.35,51,459/- |
| I. Venture Capital Pvt. Ltd. | Rs.3,20,000/- |
6. Ms Kapoor says that a perusal of the reply filed by the petitioner/assessee, albeit, after the impugned order was passed under Section 148A(d) of the Act, would show that the petitioner/assessee has taken the stand that he did not enter into any transaction with Dayanand Singh, as alleged by the respondent/revenue, or at all. 6.1 Ms Kapoor submits that if the amount alleged to have been transacted with Dayanand Singh, i.e., Rs.33,81,000/- is taken out of the equation, the alleged escaped income would be below Rs.50 lakhs.
7. Unfortunately for the petitioner/assessee, this stand was not taken in time.
8. Given this position, the writ petition is disposed of, with a direction that before the Assessing Officer (AO) proceeds to pass an assessment order, he will verify the assertion made by the petitioner/assessee which is recorded in the reply, and in this context, also accord personal hearing to the petitioner/assessee and/or his authorised representative.
9. Consequently, pending application shall also stand closed.
The importance of timely assertion and the requirement for verification and personal hearing before passing an assessment order under the Income Tax Act.
Administrative orders can be set aside by courts if found to be flawed in execution, ensuring rectification of inaccuracies in legal processes.
The court determined that the reopening of assessment under Section 148A was unwarranted as the case fell under Section 153C due to insufficient adherence to procedural requirements.
The Assessing Officer must provide adequate reasoning for reassessment actions and ensure compliance with natural justice principles.
Reopening of assessment proceedings is invalid if it violates CBDT Instructions regarding threshold limits for escaped income, specifically when such income is below Rs.50,00,000.
Point of law: Petitioner is admittedly covered by proviso (c) to Section 148A, this Court is of the view that the impugned order and notice are untenable in law.
The court emphasized the importance of correct premise, sharing of relevant information, and clear understanding of the provisions of the Income Tax Act, 1961 in reassessment proceedings.
The central legal point established in the judgment is that reassessment proceedings must comply with the statutory provisions and CBDT instructions, and notices cannot be issued for assessment years....
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