Facts of the Case

The petitioner challenged the validity of notice issued under Section 148A(b), the order passed under Section 148A(d), and consequential notice under Section 148 for Assessment Year 2017–18.

The reassessment proceedings were initiated on the allegation that the petitioner had received accommodation entries amounting to ₹44,50,985/- through an entry provider via Asian Bulls Capital Private Limited in relation to share transactions.

Subsequently, additional show cause notices and hearing communications were issued by the department, which were also challenged by the petitioner.

 Issues Involved

  1. Whether reassessment proceedings under Sections 148A(b) and 148A(d) are valid when there is a mismatch between the notice allegations and Case Related Information Details (CRID).
  2. Whether such inconsistency violates principles of natural justice.

Petitioner’s Arguments

  • The Case Related Information Details (CRID) did not match the allegations made in the notice.
  • The value of alleged transactions in the notice differed from the CRID data.
  • The CRID referred to a different person, thereby making the basis of proceedings incorrect.
  • Relevant documents and material were not supplied.
  • The petitioner had not dealt with unlisted shares as alleged.

Respondent’s Arguments

  • The revenue relied on the information suggesting accommodation entries through share transactions.
  • It was contended that reassessment proceedings were valid based on available records.

Court Findings / Order

  • The Court observed a clear misalignment between the allegations in the notice and the CRID data.
  • It was noted that the CRID appeared to relate to another individual, not the petitioner.
  • Such inconsistency rendered the reassessment proceedings unsustainable.

Final Order:

  • Order passed under Section 148A(d) was set aside.
  • Consequential notices were also quashed.
  • Matter remanded back with liberty to the Assessing Officer to conduct fresh (de novo) proceedings.
  • AO directed to:
    • Provide correct material to the petitioner
    • Grant opportunity of reply
    • Provide personal hearing
    • Pass a reasoned (speaking) order

Important Clarification by Court

  • Reassessment cannot be sustained when foundational information is incorrect or mismatched.
  • Proper disclosure of material and adherence to natural justice is mandatory before proceeding under Section 148.
  • Mechanical reliance on incorrect CRID data invalidates proceedings.

Sections Involved

  • Section 148
  • Section 148A(b)
  • Section 148A(d)
    of the Income Tax Act, 1961

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/60818052023CW66212023_115930.pdf

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