Facts of the Case

The petitioner challenged the validity of reassessment proceedings initiated under the Income Tax Act, 1961. The dispute arose from:

  • Notice dated 23.02.2023 under Section 148A(b) alleging unexplained credits of ₹1.33 crore in the petitioner’s bank account.
  • These credits were allegedly linked to transactions with M.K. Traders, Luxmi Agencies, and Lucky Traders.
  • The petitioner denied any such transactions and submitted bank statements (Indian Bank and ICICI Bank).

However, while passing the order under Section 148A(d), the Assessing Officer (AO):

  • Shifted the basis of allegation from unexplained credits to unexplained investment in unquoted shares of Mahavir Transmission Ltd.

Issues Involved

  1. Whether reassessment proceedings are valid when the basis of allegation changes from notice under Section 148A(b) to order under Section 148A(d).
  2. Whether failure to confront the assessee with the new ground (unexplained investment) violates principles of natural justice.
  3. Whether such action amounts to change of opinion / shifting of goalpost rendering proceedings invalid.

Petitioner’s Arguments

  • The petitioner never transacted with the entities mentioned in the notice.
  • All relevant bank statements were duly furnished, including ICICI Bank account details.
  • The AO changed the entire basis of reassessment:
    • From unexplained credits → to unexplained investments.
  • No opportunity was given to explain the new allegation, making the proceedings arbitrary and illegal.

Respondent’s Arguments

  • The Revenue contended that:
    • The petitioner had allegedly not furnished ICICI Bank statements.
  • However, upon verification, it was conceded that:
    • The petitioner had indeed uploaded the bank statements on the portal.

Court’s Findings / Order

The Delhi High Court held:

  • The Assessing Officer clearly shifted the “goalpost”:
    • Initial allegation: unexplained bank credits
    • Final basis: unexplained share investment
  • Such a shift without prior notice is impermissible.
  • An investment can be questioned only if the assessee is specifically called upon to explain it.
  • The Court observed that:
    • The record itself demonstrated inconsistency in the AO’s approach.

Final Order

  • Impugned:
    • Notice under Section 148A(b)
    • Order under Section 148A(d)
    • Notice under Section 148
      → All set aside
  • Liberty granted to AO to proceed in accordance with law

Important Clarification

  • The Court reaffirmed that:
    • Reassessment proceedings must strictly adhere to the grounds stated in the notice.
    • Authorities cannot introduce new grounds at the stage of final order.
    • Any such shift violates:
      • Principles of natural justice
      • Statutory scheme of Section 148A

Sections Involved

  • Section 148A(b) – Show cause notice before reassessment
  • Section 148A(d) – Order deciding whether to reopen assessment
  • Section 148 – Issuance of reassessment notice
  • Income Tax Act, 1961

Link to download the order - https://delhihighcourt.nic.in/app/showFileJudgment/60825092023CW119352023_165216.pdf

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