Facts of the Case

The present writ petition pertains to Assessment Year (AY) 2016–17. The petitioner challenged reassessment proceedings initiated by the Income Tax Department on the ground that they were based on incorrect and misleading information.

The Revenue alleged that the petitioner had sold an immovable property situated in Mumbai. However, the petitioner contended that such allegation stemmed from incorrect linkage with an old Permanent Account Number (PAN), which had been inactive since 1999. A new PAN had already been issued to her, and she denied ownership of any such property. 

Issues Involved

  1. Whether reassessment proceedings can be validly initiated on the basis of incorrect or misleading information.
  2. Whether the impugned order passed under Section 148A(d) and notice under Section 148 of the Income Tax Act, 1961 are sustainable in law.
  3. Whether failure to provide relevant material to the assessee violates principles of natural justice.

Petitioner’s Arguments

  • The reassessment was triggered due to misinformation linked to an obsolete PAN.
  • The petitioner had no ownership or connection with the alleged Mumbai property.
  • The Assessing Officer failed to provide crucial documents, including the sale deed, despite repeated requests.
  • The proceedings violated principles of fairness and transparency.

Respondent’s Arguments

  • The Revenue relied on existing records and information available with the Assessing Officer.
  • It was contended that reassessment proceedings were initiated as per statutory provisions.
  • The respondent agreed to proceed based on the record without filing a counter-affidavit.

Court Findings / Order

  • The Court observed that prima facie reassessment was triggered due to misinformation.
  • The impugned order dated 17.04.2023 passed under Section 148A(d) was set aside.
  • Consequently, the notice issued under Section 148 was also quashed.
  • The Assessing Officer was granted liberty to:
    • Restart proceedings from the stage of notice under Section 148A(b).
    • Provide all relevant material/information to the petitioner.
    • Allow the petitioner adequate opportunity to respond.
    • Grant a personal hearing before passing a speaking order.
  • The writ petition was disposed of accordingly.

Important Clarification by Court

  • Reassessment cannot be sustained where it is initiated based on incorrect factual foundation.
  • Authorities must ensure proper verification of PAN details before initiating proceedings.
  • The assessee must be furnished relevant documents and evidence relied upon by the Revenue.
  • Principles of natural justice and fair hearing must be strictly followed.

Sections Involved

  • Section 148 – Income escaping assessment
  • Section 148A(b) – Opportunity before issuance of notice
  • Section 148A(d) – Order after considering reply
  • Income Tax Act, 1961

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/60818072023CW94162023_103844.pdf

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