Facts of the Case

The petitioner, Srivenkateshwar Tradex Private Limited, was subjected to reassessment proceedings for Assessment Year 2019–20. The Assessing Officer issued a notice under Section 148A(b) alleging bogus purchases from certain entities, including Jatalia Global Ventures Ltd. and RCI Industries & Technologies Ltd., involving substantial transactions.

Subsequently, another notice dated 27.03.2023 was issued introducing a new allegation concerning transactions with Reema Polychem Private Limited. However, the petitioner was granted only two days to respond to this second notice.

Despite submission of replies, the Assessing Officer passed an order under Section 148A(d), initiating reassessment proceedings.

Issues Involved

  1. Whether granting only two days to respond to a notice under Section 148A(b) violates statutory provisions.
  2. Whether reassessment proceedings can be initiated solely based on pending GST proceedings without independent application of mind.
  3. Whether the impugned order passed under Section 148A(d) is sustainable in law.

Petitioner’s Arguments

  • The reassessment proceedings were triggered mechanically based on GST show-cause notices without independent satisfaction under the Income Tax Act.
  • The second notice introduced entirely new allegations but provided only two days to respond, which is contrary to the statutory minimum period.
  • The limited timeframe prevented submission of a detailed and effective reply, thereby violating principles of natural justice.

Respondent’s Arguments

  • The Revenue contended that no prejudice was caused since the petitioner’s replies were considered in the impugned order.
  • It was argued that the reassessment proceedings were validly initiated based on available information.
  • However, the respondent conceded that the statutory minimum time of seven days was not provided.

Court Findings / Order

  • Section 148A(b) mandates a minimum statutory timeframe of seven days for filing a response.
  • Granting only two days is a clear violation of statutory provisions.
  • Accepting such deviation would lead to uncertainty and undermine procedural safeguards.

Order Passed:

  • The impugned order dated 31.03.2023 under Section 148A(d) was set aside.
  • Liberty was granted to the Assessing Officer to pass a fresh order.
  • The petitioner was granted two weeks to file a comprehensive reply.
  • The Assessing Officer was directed to:
    • Provide an opportunity of personal hearing, and
    • Pass a reasoned (speaking) order thereafter.

Important Clarification

  • Compliance with statutory timelines is mandatory, not procedural formality.
  • Even if replies are considered, denial of adequate opportunity vitiates proceedings.
  • Reassessment cannot be triggered mechanically based on external statutes like GST without independent application of mind.

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/RAS24082023CW71872023_151414.pdf

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