Facts of the Case

The present writ petition pertains to Assessment Year 2019–2020, wherein the petitioner, Deepak Modi, was subjected to reassessment proceedings on allegations of availing accommodation entries through an entity named New Goodwill Traders.

The Revenue alleged that such transactions were bogus and resulted in escapement of income amounting to ₹65,95,123/-.

The petitioner contended that all relevant documents, including purchase bills, E-way bills, lorry receipts, sales invoices, GSTR-2A/2B, and bank statements reflecting RTGS payments, were duly furnished before the Assessing Officer (AO).

It was further noted that reassessment proceedings were triggered based on search and seizure operations conducted against entities such as Star Traders Group 

Issues Involved

  1. Whether reassessment proceedings under Section 148A(d) can be sustained without conducting proper inquiry.
  2. Whether failure to grant a personal/oral hearing violates principles of natural justice.
  3. Whether CBDT instructions mandating procedural safeguards were followed before initiating reassessment.

Petitioner’s Arguments

  • The petitioner argued that no proper inquiry was conducted prior to initiating reassessment proceedings.
  • It was contended that all documentary evidence substantiating genuine transactions had already been submitted.
  • The petitioner relied upon CBDT guidelines dated 22.08.2022, asserting that the AO failed to verify information as mandated.
  • A key grievance raised was that despite requesting an oral hearing, the same was not granted, depriving the petitioner of an opportunity to clarify doubts raised by the AO.

Respondent’s Arguments

  • The Revenue contended that the petitioner was linked to entities engaged in providing accommodation entries.
  • It was submitted that reassessment was triggered based on information arising from search and seizure operations involving such entities.
  • However, the Revenue admitted through affidavit that no oral hearing was granted before passing the order under Section 148A(d).

Court’s Findings / Order

  • The Revenue’s affidavit clearly established that no personal hearing was granted prior to passing the impugned order.
  • The Court held that granting an opportunity of hearing is a necessary procedural safeguard under the statutory framework and CBDT instructions.

Order Passed:

  • The impugned order dated 30.03.2023 under Section 148A(d) was set aside.
  • The consequential notice issued under Section 148 was also quashed.
  • Liberty was granted to the Assessing Officer to pass a fresh order after granting oral hearing.
  • The AO was directed to pass a speaking order and furnish a copy to the petitioner.

Important Clarification

  • The Court did not adjudicate on the merits of alleged bogus transactions.
  • The decision is confined to procedural illegality and violation of natural justice.
  • The AO retains liberty to initiate fresh proceedings in accordance with law after complying with due process.

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/RAS22112023CW57372023_171828.pdf

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