Back
IN THE HIGH COURT OF DELHI AT NEW DELHI
Rajiv Shakdher, Girish Kathpalia, JJ.
Home Credit India B. V. – Appellant
Versus
Assistant Commissioner of Income Tax Circle 2 1 1, International Taxation New Delhi & Anr. – Respondents
W.P.(C) 7397 of 2023 & CM Nos.28775-76 of 2023
Decided On : 26-05-2023
Income Tax Act - Assessment Year 2019-20 - Notice issued under Section 148A(b) - Set aside due to lack of application of mind - Remitted to the Assessing Officer for de novo exercise
Fact of the Case:
The writ petition concerns Assessment Year 2019-20. The petitioner contended that the notice issued under Section 148A(b) of the Income Tax Act was issued without application of mind.
Finding of the Court:
The court set aside the impugned notice and order, and remitted the matter to the Assessing Officer for a de novo exercise. The Assessing Officer was given liberty to recommence the proceeding if deemed necessary, after gathering relevant material showing that income chargeable to tax had escaped assessment.
Issues: The issues involved the validity of the notice issued under Section 148A(b) of the Income Tax Act and the lack of application of mind by the Assessing Officer.
Ratio Decidendi: The court found that the notice had been issued without proper application of mind and therefore set it aside, allowing the Assessing Officer to recommence the proceeding after gathering relevant material.
Final Decision: The writ petition was disposed of in favor of the petitioner, with the impugned notice and order being set aside, and the matter remitted to the Assessing Officer for a de novo exercise.
JUDGMENT
Rajiv Shakdher, J. (Oral)
CM No.28776/2023
1. Allowed, subject to just exceptions.
W.P.(C) 7397/2023 & CM No.28775/2023 [Application filed on behalf of the petitioner seeking interim relief]
2. Issue notice.
2.1. Mr Sanjay Kumar, learned senior standing counsel, accepts notice on behalf of the respondents/revenue.
3. Given the directions that we propose to issue, Mr Kumar says that he does not wish to file a counter-affidavit in the matter, and he will argue the matter based on the record presently available with the court.
3.1. Therefore, with the consent of learned counsel for the parties, the matter is taken up for hearing and final disposal at this stage itself.
4. This writ petition concerns Assessment Year (AY) 2019-20.
5. Mr Sachit Jolly, who appears on behalf of the petitioner, has drawn our attention to the notice dated 04.03.2023 issued under Section 148A(b) of the Income Tax Act, 1961 [in short, "Act"].
5.1. It is Mr Jolly's contention that the notice had been issued without application of mind. In this context, Mr Jolly has broadly made the following submissions:
(i) First, the allegation concerns investment in shares and, as correctly put by him, at this stage, it could not have been said, without material on record, that it would constitute income chargeable to tax, which had escaped assessment.
(ii) Second, the notice seeks a copy of the passport reflecting travel details. Once again, Mr Jolly correctly states that the petitioner, i.e., the notice, is a company, therefore, this information could not have been sought from it.
(iii) Third, the Assessing Officer (AO) also asked for a tax residency certificate and, therefore, it appears he is completely unclear whether he is issuing notice to an individual or a corporate entity.
(iv) Fourth, to a query concerning applicability of Section 50CA, Mr Jolly submits that this provision applies to transfer of shares, and not investment in shares.
6. We have put these aspects to Mr Kumar. Mr Kumar says that the best way forward would be to remit the matter to the AO, to conduct a de novo exercise.
7. We tend to agree with Mr Kumar.
8. Accordingly, the impugned notice and order are set aside.
9. Liberty is, however, given to the AO to recommence the proceeding, if deemed necessary, albeit, after gathering the relevant material which would show that income chargeable to tax has escaped assessment qua the petitioner.
10. In case, the AO deems it fit to recommence the proceeding, he/she will issue notice to the petitioner.
11. The AO will also, in that event, accord personal hearing to the authorized representative of the petitioner.
12. Needless to add, in such a situation, the AO will pass a speaking order; a copy of which will be furnished to the petitioner.
13. The writ petition is disposed of, in the aforesaid terms.
14. Consequently, the pending application shall stand closed.
15. Parties will act based on the digitally signed copy of the order.
The main legal point established in the judgment is that notices issued under the Income Tax Act must be based on proper application of mind, and if found lacking, can be set aside by the court.
The court emphasized the importance of adhering to the original allegation in the notice and found the Assessing Officer's conclusion regarding fair market value to be erroneous, leading to the setti....
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 Assessing Officer must provide adequate reasoning for reassessment actions and ensure compliance with natural justice principles.
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 failure to consider the petitioner's reply and grant a hearing led to the setting aside of the assessment order and the direction for a fair hearing and speaking order by the Assessing Officer.
The requirement of prior approval of the specified authority under Section 148A(d) satisfies the condition for issuance of a notice under Section 148 of the Income Tax Act, 1961.
The central legal point established in the judgment is the importance of correct assessment by the Assessing Officer and the disclosure of transactions in the Return of Income (ROI) for the assessmen....
The principle of consistency in reasons for reopening assessments is crucial in determining the sustainability of notices issued under the Income Tax Act.
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
