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IN THE HIGH COURT OF DELHI AT NEW DELHI
Rajiv Shakdher, Girish Kathpalia, JJ.
Oum Lamitech Private Limited – Appellant
Versus
Income Tax Officer Ward 19(1), Delhi & Anr. – Respondents
W.P.(C) 6619 of 2023
Decided On : 18-05-2023
Income Tax Act - Assessment of Escaped Income - The court set aside the impugned order issued under Section 148 of the Income Tax Act, 1961, as the petitioner's documents were not taken into account by the Assessing Officer. The AO was given liberty to take next steps in law and furnish material linking the petitioner to the transactions alleged.
Fact of the Case:
The petitioner was alleged to have entered into transactions with a certain individual, resulting in income amounting to Rs. 21,56,000/- escaping assessment. The petitioner denied the transactions and provided documents in support.
Finding of the Court:
The court set aside the impugned order and disposed of the writ petition, giving liberty to the Assessing Officer to take next steps in law and furnish material linking the petitioner to the alleged transactions.
Issues: Alleged income escaping assessment, denial of transactions by the petitioner, failure to consider petitioner's documents by the Assessing Officer.
Ratio Decidendi: The Assessing Officer must take into account and correlate the documents provided by the petitioner, and if intending to recommence proceedings, furnish material linking the petitioner to the alleged transactions.
Final Decision: The impugned order was set aside, and the writ petition was disposed of, with liberty given to the Assessing Officer to take next steps in law and furnish material linking the petitioner to the alleged transactions.
JUDGMENT
[Physical Hearing/Hybrid Hearing (as per request)]
Rajiv Shakdher, J. (Oral)
CM APPL. 25993/2023
1. Allowed, subject to just exceptions
W.P.(C) 6619/2023 and CM APPL.25992/2023 [Application filed on behalf of the petitioner seeking interim relief]
2. Issue notice.
2.1. Mr Ruchir Bhatia, senior standing counsel, accepts notice on behalf of the respondents/revenue.
3. In view of the directions that we propose to pass, Mr Bhatia says that he does not wish to file a counter-affidavit in the matter, and he would argue based on the record presently made available to the court.
4. Therefore, with the consent of counsel for the parties, the writ petition is taken up for hearing and final disposal, at this stage itself.
5. The principal allegation levelled against the petitioner is that he has entered into transactions with one, Mr Gurdeep Kartar Singh, who apparently is the proprietor of Trinity Overseas (India) in the Assessment Year (AY) 2019-20.
6. In this backdrop, it is alleged that income amounting to Rs. 21,56,000/- which was otherwise chargeable to tax in the petitioner's hands, has escaped assessment.
7. Mr Ruchesh Sinha, who appears on behalf of the petitioner, has submitted that the petitioner's stand is that it has not entered into transactions with Mr Gurdeep Singh and/or his proprietorship concern, Trinity Overseas (India).
7.1. Mr Sinha says that in support of this plea, several documents were filed with the petitioner's reply dated 03.04.2023, but the import of the these documents has not been taken into account by the Assessing Officer (AO), while passing the impugned order.
7.2. In this context, reference is made to the ITR filed for AY 2019-20, the audited profit and loss account for the relevant years, and the party-wise sales ledger.
8. Mr Bhatia cannot but accept that these documents would have to be taken into account and correlated with the material which is available with the AO.
9. We may note that although the AO has furnished a copy of the investigation report, prima facie, there is no reference to the petitioner in the said report.
10. Therefore, according to us, the best way forward would be to set aside the impugned order dated 06.04.2023 issued under Section 148 of the Income Tax Act, 1961 [in short, "Act"].
10.1. It is ordered accordingly.
11. Liberty is, however, given to the AO to take next steps in law.
12. In case the AO intends to recommence proceedings, he shall furnish the material which is in his possession, if not already supplied, which links the petitioner to the transactions allegedly entered into with Mr Gurdeep Singh.
13. The writ petition is disposed of in the aforesaid terms.
14. Pending application shall also stand disposed of.
15. Parties will act based on the digitally signed copy of the order.
The Assessing Officer must consider and correlate the documents provided by the petitioner in an assessment of escaped income under the Income Tax Act, 1961.
The court emphasized the importance of providing evidence, such as bank statements, to establish non-involvement in alleged transactions for reassessment proceedings under the Income Tax Act.
Violation of principles of natural justice in not granting the petitioner enough opportunity to furnish an explanation in defense of the charge levelled against him.
The central legal point established in the judgment is that reassessment proceedings cannot be triggered based on unsubstantiated allegations, and the court has the authority to set aside the impugne....
Reassessment proceedings cannot be solely based on mere suspicion and must be supported by concrete evidence or material.
The court emphasized the importance of reasonableness and rationality in the assessment process and granted the AO the opportunity to re-examine the issue with a fresh look and grant a personal heari....
The importance of timely assertion and the requirement for verification and personal hearing before passing an assessment order under the Income Tax Act.
The court emphasized the importance of the Assessing Officer's proper consideration of the petitioner's objections and material placed before forming an opinion on alleged income chargeable to tax.
Failure to grant a personal hearing by the Assessing Officer violates principles of natural justice, necessitating the annulment of the assessment order.
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