Facts of the Case

  • The petitioner, a company incorporated in the British Virgin Islands, was subjected to reassessment proceedings for AY 2019–20.
  • The allegation against the petitioner was that investment of ₹43.52 crores in equity shares of Mentor Capital Ltd. remained unexplained.
  • The petitioner was a non-filer and claimed that:
    • No income accrued or arose in India
    • No obligation existed to file income tax returns
  • A notice under Section 148A(b) was issued on 27.03.2023.
  • The petitioner submitted a reply dated 24.04.2023 via email.
  • However, while passing the order under Section 148A(d) dated 27.04.2023, the Assessing Officer failed to consider the petitioner’s reply.

 Involved

  1. Whether an order under Section 148A(d) is valid when the reply filed by the assessee is not considered?
  2. Whether failure to consider the reply violates principles of natural justice?
  3. Whether reassessment proceedings can continue without furnishing underlying material to the assessee?

Petitioner’s Arguments

  • The petitioner contended that:
    • No material or information was provided forming the basis of reassessment.
    • Its reply dated 24.04.2023 was duly submitted (via email).
    • The Assessing Officer passed the order without considering the reply.
  • Hence, the order was arbitrary and violative of principles of natural justice.
  • Respondent’s Arguments
  • The Revenue submitted:
    • The reply may not have been considered because it was not uploaded on the designated portal.
    • However, records indicate that the reply was sent via email.
    • Suggested that the matter be remanded to the Assessing Officer for fresh consideration.

 Court’s Findings / Order

  • The Court observed that:
    • The petitioner’s reply was not considered while passing the order under Section 148A(d).
  • Accordingly:
    • The impugned order dated 27.04.2023 was set aside.
    • The Assessing Officer was granted liberty to pass a fresh order.
  • Directions issued:

1.                  The AO must furnish all material/information relied upon.

2.                  The petitioner must be given opportunity to respond.

3.                  Personal hearing must be granted.

4.                  A speaking order must be passed thereafter.

 Important Clarification by Court

  • Even if procedural lapse occurred (non-upload on portal), actual submission of reply (via email) must be considered.
  • Non-consideration of reply renders the reassessment order unsustainable.
  • Emphasis on natural justice and fair opportunity before reassessment. 

Link to download the order - https://delhihighcourt.nic.in/app/showFileJudgment/RAS30052023CW76272023_183445.pdf

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