Facts of the Case

The present writ petition pertains to Assessment Year 2019–20, wherein the petitioner challenged:

  • Order dated 24.03.2023 passed under Section 148A(d) of the Income Tax Act
  • Consequential notice issued under Section 148
  • Show cause notice dated 04.03.2023 issued under Section 148A(b)

The Assessing Officer (AO) alleged that the petitioner had entered into fictitious purchase transactions amounting to ₹1,14,34,000/- with an entity named M/s Krishna Traders.

However, the impugned order contained contradictory statements—one part stated that the petitioner had filed a return declaring income of ₹56,09,080/-, while another part recorded that no return had been filed.

Issues Involved

  1. Whether the order passed under Section 148A(d) is valid despite apparent contradictions in findings.
  2. Whether lack of application of mind by the Assessing Officer vitiates reassessment proceedings.
  3. Whether principles of natural justice were violated due to procedural irregularities.

 Petitioner’s Arguments

  • The impugned order suffered from non-application of mind.
  • There were inherent contradictions in the order regarding filing of return of income.
  • The petitioner contended that it had a valid explanation for the alleged transactions.
  • The order was arbitrary and legally unsustainable.

Respondent’s Arguments

  • The Revenue argued that the contradiction may be an inadvertent error.
  • It was submitted that such inconsistency was not reflected in the show cause notice issued under Section 148A(b).
  • The petitioner had failed to file a reply to the notice dated 04.03.2023.

 Court’s Findings / Order

  • The Court observed that the contradiction in the impugned order was material and significant.
  • It held that such inconsistency could prove fatal if allowed to stand.
  • The Court set aside:
    • Order dated 24.03.2023 under Section 148A(d)
    • Consequential notice issued under Section 148
  • Directions issued:
    • Petitioner to file reply to notice under Section 148A(b) within 4 weeks
    • AO to grant personal hearing
    • AO to pass a speaking order thereafter
  • The Court clarified that setting aside the order would not affect the merits of the case.

 Important Clarification

The Court emphasized that contradictory findings within the same reassessment order reflect lack of application of mind, which renders such order legally unsustainable. Further, procedural fairness must be ensured by granting opportunity of hearing and passing a reasoned order.

 Link to download the order - https://delhihighcourt.nic.in/app/showFileJudgment/60830052023CW76972023_145820.pdf

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