Facts of the Case

The petitioner, Shukla Enterprises Private Limited, filed a writ petition challenging:

  • Order dated 29.07.2022 passed under Section 148A(d)
  • Notice dated 30.07.2022 issued under Section 148
  • Show cause notice dated 25.05.2022 issued under Section 148A(b)

The Revenue alleged that the petitioner was a beneficiary of accommodation entries provided by BKR Capital Pvt. Ltd., allegedly controlled by one Bajrang Lal Periwal. It was further alleged that the petitioner received ₹50,00,000 as unsecured loans during FY 2016–17 (AY 2017–18).

The petitioner, however, contended that:

  • It had not taken any loan but had repaid ₹50,00,000
  • It filed replies dated 08.06.2022 and 28.08.2022
  • Crucial material relied upon by the department was not furnished

Issues Involved

  1. Whether reassessment proceedings under Sections 148A(d) and 148 are valid when relied-upon material is not supplied to the assessee.
  2. Whether non-disclosure of statements and documents violates principles of natural justice.
  3. Whether reassessment can proceed without giving effective opportunity to respond to the material relied upon.

Petitioner’s Arguments

  • The petitioner argued that the entire material forming the basis of allegations was not provided.
  • Statements of key persons (including Bajrang Lal Periwal and others) referred in CRID were not supplied.
  • A portion of the Search Appraisal Report was also not furnished.
  • It was specifically highlighted that the department claimed technical difficulty (file size exceeding 5MB) for non-uploading but failed to provide documents separately.
  • This resulted in denial of effective opportunity to rebut allegations, violating natural justice.

Respondent’s Arguments

  • The Revenue relied on available records and alleged that the petitioner received accommodation entries in the form of unsecured loans.
  • It justified initiation of reassessment proceedings based on information available with the department.

Court’s Findings / Order

The Delhi High Court held:

  • The petitioner was not furnished the complete material forming the basis of allegations.
  • Statements of various individuals and relevant documents were not provided.
  • This amounted to violation of principles of natural justice.

Order:

  • The impugned order dated 29.07.2022 under Section 148A(d) was set aside
  • The notice dated 30.07.2022 under Section 148 was also quashed
  • Consequential notice under Section 142(1) automatically collapsed

However, liberty was granted to the Assessing Officer to:

  • Provide complete material relied upon
  • Allow the petitioner to file a supplementary reply
  • Grant personal hearing before proceeding further

Important Clarification by Court

  • Reassessment proceedings cannot be sustained without furnishing all relied-upon material
  • Mere technical reasons (like file size issues) cannot justify denial of documents
  • Effective opportunity of hearing includes access to complete evidence
  • Compliance with principles of natural justice is mandatory before passing order under Section 148A(d)

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/RAS28032023CW39572023_144111.pdf

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