Facts of the Case

The present writ petition pertains to Assessment Year 2019–20 and challenges the assessment order dated 19.04.2023 passed under Section 148A(d) of the Income Tax Act, 1961, along with the consequential notice issued under Section 148.

The petitioner was subjected to a notice under Section 148A(b) dated 31.03.2023 alleging escapement of income on account of undisclosed rental income amounting to ₹29,45,600 arising from ten immovable properties.

The background reveals that during a survey conducted on 28.01.2020, the petitioner admitted ownership of twelve properties but had disclosed rental income from only two properties for the relevant financial year.

Subsequently, multiple notices were issued and replies were filed by the petitioner seeking details and time to furnish market rental valuation. The final notice dated 17.04.2023 required submission by 18.04.2023 at 2:00 PM. The petitioner submitted a reply on 18.04.2023 at 1:15 PM along with supporting documents.

However, while passing the impugned order, the Assessing Officer recorded that no reply had been received.

 Issues Involved

  1. Whether the assessment order passed under Section 148A(d) is liable to be set aside for violation of principles of natural justice.
  2. Whether the Assessing Officer failed to consider the reply filed by the petitioner within the stipulated time.
  3. Whether granting an inadequate opportunity to respond vitiates reassessment proceedings.

 Petitioner’s Arguments

  • The petitioner contended that she had duly filed a reply within the time prescribed (before 2:00 PM on 18.04.2023), along with supporting documents.
  • It was argued that the Assessing Officer failed to consider the said reply, thereby violating principles of natural justice.
  • The petitioner sought setting aside of the impugned order and requested a fresh opportunity to present her case along with fair market rental valuation.

 Respondent’s Arguments

  • The Revenue contended that multiple opportunities had already been granted to the petitioner.
  • It was argued that the petitioner failed to respond adequately within the timeline and therefore no interference was warranted in the impugned order.

 Court’s Findings / Order

  • Although several notices were issued, the final opportunity granted to the petitioner was extremely limited.
  • The petitioner had, in fact, filed the reply within the stipulated time on 18.04.2023.
  • The Assessing Officer failed to take into account the reply and documents submitted by the petitioner.
  • The alleged escapement of income was based on notional rent, which required proper consideration and evaluation.

Accordingly, the Court held that there was a clear violation of principles of natural justice.

Order:

  • The impugned order dated 19.04.2023 passed under Section 148A(d) and the consequential notice under Section 148 were set aside.
  • The matter was remanded back to the Assessing Officer for fresh adjudication (de novo proceedings).
  • The Assessing Officer was directed to pass a reasoned (speaking) order after considering the petitioner’s submissions.

 Important Clarification

The Court expressly clarified that:

  • The observations made in the judgment shall not affect the merits of the case.
  • The Assessing Officer is free to take an independent decision after granting proper opportunity of hearing.

 Sections Involved

  • Section 148 – Income Escaping Assessment
  • Section 148A(b) – Inquiry before issuance of notice
  • Section 148A(d) – Order deciding whether it is a fit case for reassessment
  • Principles of Natural Justice

 Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/60818052023CW65142023_114854.p

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