Facts of the Case

The petitioner, Kamal Nath, challenged notices issued under Section 153C of the Income Tax Act for multiple assessment years ranging from AY 2010–11 to AY 2020–21.

The reassessment proceedings were initiated based on alleged incriminating material discovered during a search and survey conducted on third parties, including entities such as Moser Baer Group and Hindustan Power Group, along with certain individuals.

Subsequently, the petitioner’s case was transferred from Kolkata to Delhi under Section 127 of the Act. The petitioner had earlier challenged this transfer but failed, including dismissal of the SLP by the Supreme Court.

The petitioner filed objections dated 24.03.2023 against the Section 153C notices, which remained pending. Additionally, a satisfaction note for AY 2020–21 was provided after filing of the writ petitions.

Issues Involved

  1. Whether reassessment proceedings under Section 153C can proceed without disposal of objections filed by the assessee.
  2. Whether failure to provide timely satisfaction note violates principles of natural justice.
  3. Whether the petitioner is entitled to an opportunity of hearing before further reassessment action.

Petitioner’s Arguments

  • The petitioner contended that objections filed against the reassessment notices must be decided before proceeding further.
  • It was argued that the satisfaction note was supplied belatedly, i.e., after filing of the writ petitions, thereby prejudicing the petitioner’s right to respond.
  • The petitioner sought an opportunity to file objections specifically against the satisfaction note for AY 2020–21.

Respondent’s Arguments

  • The Revenue submitted that objections filed by the petitioner would be duly considered.
  • It was assured that the petitioner would be granted an opportunity of hearing.
  • The respondents agreed to allow filing of objections against the satisfaction note and to follow due process.

Court’s Findings / Order

The Delhi High Court disposed of the writ petitions with the following key directions:

  • The Revenue must dispose of objections dated 24.03.2023 in accordance with law.
  • A proper hearing opportunity must be granted to the petitioner.
  • The petitioner is permitted to file objections to the satisfaction note within two weeks.
  • The Revenue must pass a reasoned (speaking) order on objections.
  • All relevant material must be furnished to the petitioner before proceeding further.
  • No coercive/precipitative action shall be taken for six weeks.
  • If adverse order is passed, the petitioner retains liberty to seek legal remedies.
  • Assessment order, if required, may be passed within the prescribed extended timeline.

Important Clarification

  • The Court emphasized adherence to principles of natural justice, particularly:
    • Prior disposal of objections
    • Grant of fair hearing
    • Supply of relevant material
  • The judgment reinforces that reassessment under Section 153C cannot proceed mechanically without procedural safeguards.

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/59028032023CW39602023_131119.pdf


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