Facts of the Case

The present writ petition pertains to Assessment Year 2014–15, wherein the petitioner/assessee challenged:

  • Order dated 21.07.2022 passed under Section 148A(d) of the Income Tax Act
  • Consequential notice issued under Section 148
  • Notice dated 29.05.2022 issued under Section 148A(b)
  • CBDT Instruction No. 1/2022 dated 11.05.2022

The petitioner admittedly did not submit a reply to the notice issued under Section 148A(b) within the prescribed time. However, a reply was later filed on 30.04.2023.

The Case Related Information Detail (CRID) referred to certain financial transactions involving:

  • Dayanand Singh – ₹33,81,000
  • Lifeline Securities Ltd. – ₹35,51,459
  • I. Venture Capital Pvt. Ltd. – ₹3,20,000

 Issues Involved

  1. Whether reassessment proceedings initiated under Sections 148 and 148A were valid when the assessee failed to respond within time to notice under Section 148A(b).
  2. Whether the Assessing Officer is obligated to consider a belated reply filed by the assessee.
  3. Whether alleged transactions forming the basis of reassessment could be disputed at a later stage.

 Petitioner’s Arguments

  • The petitioner contended that a reply was filed (albeit belatedly) clarifying the transactions mentioned in the CRID.
  • It was argued that no transaction was entered into with Dayanand Singh.
  • If the alleged transaction of ₹33,81,000 is excluded, the escaped income would fall below ₹50 lakhs.
  • The petitioner sought consideration of the reply and appropriate relief against reassessment proceedings.

 Respondent’s Arguments

  • The Revenue emphasized that the petitioner failed to respond within the statutory timeline to the notice under Section 148A(b).
  • The reassessment proceedings were initiated based on available information and in compliance with statutory provisions.
  • The belated reply could not invalidate the already passed order under Section 148A(d).

 Court’s Findings / Order

  • The Court noted that the petitioner failed to raise objections within the prescribed time.
  • However, considering that a reply had subsequently been filed, the Court deemed it appropriate to allow verification of the petitioner’s assertions.
  • The writ petition was disposed of with the direction that:
    • The Assessing Officer shall verify the claims made in the petitioner’s reply.
    • The petitioner shall be granted a personal hearing before passing the assessment order.
  • Pending applications were also disposed of.

 Important Clarification

  • The Court did not quash the reassessment proceedings.
  • Relief was limited to procedural fairness by directing the Assessing Officer to consider the petitioner’s submissions.
  • Failure to respond to Section 148A(b) notice within time can weaken the assessee’s case, but a belated reply may still be considered at the assessment stage.

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/60815052023CW62832023_145450.pdf

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