Facts of the Case

The petitioner challenged the validity of reassessment proceedings initiated by the Income Tax Department for Assessment Year 2016–17. The challenge was directed against:

  • Show Cause Notice issued under Section 148A(b) dated 18.05.2022
  • Order passed under Section 148A(d) dated 22.07.2022
  • Assessment Order under Section 147 dated 19.04.2023

The petitioner contended that the reassessment proceedings were conducted in violation of the principles of natural justice and that the order passed went beyond the allegations stated in the initial notice.

Issues Involved

  1. Whether the reassessment proceedings violated principles of natural justice.
  2. Whether the order under Section 148A(d) exceeded the scope of the show cause notice issued under Section 148A(b).
  3. Whether reassessment orders under Sections 147 and 148 can be sustained when procedural safeguards are not followed.

 Petitioner’s Arguments

  • The petitioner argued that there was a clear breach of principles of natural justice.
  • It was submitted that the order passed under Section 148A(d) travelled beyond the allegations mentioned in the notice issued under Section 148A(b).
  • The reassessment proceedings were therefore arbitrary and legally unsustainable.

 Respondent’s Arguments

  • The Revenue, through its counsel, fairly conceded that there had been a breach of principles of natural justice in the present case.
  • The respondent did not insist on filing a counter-affidavit and agreed for final disposal based on the available record.

 Court’s Findings

  • The Court observed that there was a clear violation of principles of natural justice.
  • It held that the order passed under Section 148A(d) could not be sustained as it went beyond the scope of the show cause notice.
  • The appropriate course was to restore the matter to the stage of issuance of notice under Section 148A(b).

 Court Order

  • The Court set aside:
    • Order dated 22.07.2022 under Section 148A(d)
    • Assessment Order dated 19.04.2023 under Section 147
    • Consequential notice under Section 148
  • Liberty was granted to the Assessing Officer to recommence proceedings in accordance with law.
  • The Assessing Officer was directed to:
    • Provide an opportunity of personal hearing
    • Issue proper notice with date and time
    • Pass a reasoned speaking order

The writ petition was disposed of accordingly.

 Important Clarification

  • The Court did not quash reassessment proceedings permanently but reset the process to ensure compliance with due process.
  • It emphasized that reassessment must strictly adhere to procedural safeguards under Section 148A.
  • A speaking order is mandatory both at the stage of Section 148A(d) and final assessment.

Link to download the order - https://delhihighcourt.nic.in/app/showFileJudgment/RAS31052023CW78252023_151754.pdf

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