Facts of the Case

The petitioner, Rajnish Yadav, was alleged to have received accommodation entries from a third party, namely Sanjay Jain, and to have made bogus purchases amounting to ₹11,98,577.

A notice dated 29.03.2023 was issued under Section 148A(b) of the Income Tax Act, granting time to respond. The petitioner responded on 04.04.2023, highlighting that the material relied upon by the Assessing Officer (AO) had not been furnished to him.

Despite this, the AO passed an order under Section 148A(d) on 13.04.2023 without supplying the relevant documents, including the statement of Sanjay Jain recorded under Section 132(4).

 Issues Involved

  1. Whether an order under Section 148A(d) can be sustained when the material relied upon is not furnished to the assessee.
  2. Whether failure to provide the statement recorded under Section 132(4) violates principles of natural justice.
  3. Whether reassessment proceedings can proceed without giving a proper opportunity to respond to the material relied upon.

Petitioner’s Arguments

  • The petitioner contended that the AO failed to provide the underlying material forming the basis of the allegations.
  • It was argued that the statement of Sanjay Jain, relied upon by the department, was not furnished.
  • The petitioner emphasized violation of principles of natural justice due to lack of opportunity to effectively respond.

 Respondent’s Arguments

  • The Revenue argued based on the existing record and supported the order passed under Section 148A(d).
  • It was contended that the proceedings were validly initiated based on available information regarding accommodation entries and bogus purchases.

 Court’s Findings / Order

The Delhi High Court observed that:

  • The material relied upon, including the statement under Section 132(4), was not provided to the petitioner.
  • Passing an order without furnishing such material deprives the assessee of a fair opportunity to respond.

Accordingly, the Court:

  • Set aside the impugned order dated 13.04.2023 passed under Section 148A(d).
  • Directed the Assessing Officer to conduct a de novo exercise after supplying all relevant documents.
  • Granted liberty to the petitioner to file a reply after receiving the material.

 Important Clarification by the Court

  • The AO must provide all relevant material within two weeks.
  • The petitioner is entitled to file a reply within four weeks thereafter.
  • The AO must consider all contentions, including jurisdictional objections, before passing a fresh order.

 Link to download the order - https://delhihighcourt.nic.in/app/showFileJudgment/RAS07072023CW89432023_114109.pdf

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