Facts of the Case

The petitioner, Riya Gangwani, filed a writ petition challenging reassessment proceedings for Assessment Year 2019–20. The challenge was directed against:

  • Notices dated 06.03.2023 and 20.03.2023 issued under Section 148A(b)
  • Order dated 24.03.2023 passed under Section 148A(d)
  • Consequential notice under Section 148

The Assessing Officer (AO) alleged that the petitioner engaged in fictitious share transactions and was a beneficiary of accommodation entries amounting to ₹27,16,180.

The petitioner submitted replies to both notices along with supporting documents, including:

  • Bank statements
  • D-MAT account details

However, despite submission of these replies, the AO proceeded to pass an order stating that no response had been filed.

Issues Involved

  1. Whether reassessment proceedings under Sections 148 and 148A were valid when replies submitted by the petitioner were not properly considered.
  2. Whether failure to consider material evidence violates principles of natural justice.
  3. Whether such procedural lapse renders the reassessment order liable to be set aside.

Petitioner’s Arguments

  • The petitioner duly responded to both notices issued under Section 148A(b).
  • All required documents, including bank statements and D-MAT details, were submitted.
  • The AO incorrectly recorded that no reply was filed.
  • The reassessment order was passed without application of mind and in violation of principles of natural justice.
  • The impugned order deserved to be quashed.

Respondent’s Arguments

  • The Revenue relied on available records and defended the reassessment proceedings.
  • It was alleged that the petitioner was involved in bogus share transactions and accommodation entries.
  • The AO had sufficient material to initiate reassessment.

Court Findings / Order

The Court observed:

  • The petitioner had indeed filed replies to both notices.
  • The AO’s observation that no reply was filed was factually incorrect.
  • Relevant documents such as bank statements and D-MAT accounts were not considered.

Important Clarifications by Court

  • Reassessment proceedings must strictly comply with procedural safeguards under Section 148A.
  • Non-consideration of replies and evidence amounts to violation of natural justice.
  • Mechanical or erroneous recording by the AO cannot sustain reassessment proceedings.

 Link to download the order - https://delhihighcourt.nic.in/app/showFileJudgment/RAS21072023CW71852023_142217.pdf

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