Facts of the Case

  • The petitioner had undergone scrutiny assessment under Section 143(3), completed on 29.12.2016.
  • A reassessment notice dated 31.03.2021 was issued for AY 2014–15 under Section 148.
  • The basis of reopening was an alleged discrepancy in sales turnover between the Tax Audit Report and Income Tax Return.
  • The petitioner submitted detailed objections along with reconciliation explaining no discrepancy.
  • However, the Assessing Officer passed an order rejecting objections without dealing with them.
  • Notably, on identical grounds, reassessment proceedings for AY 2015–16 and AY 2016–17 were dropped.

Issues Involved

  1. Whether reassessment under Section 148 can be initiated after four years without failure to disclose material facts.
  2. Whether non-consideration of objections by the Assessing Officer invalidates reassessment proceedings.
  3. Whether consistency in treatment across different assessment years impacts validity of reopening.

Petitioner’s Arguments

  • Reopening beyond four years is invalid unless there is failure to disclose material facts fully and truly.
  • There was no discrepancy in turnover; reconciliation was duly submitted.
  • The objections filed were not considered or adjudicated by the Assessing Officer.
  • On identical facts, reassessment for subsequent years was dropped, showing inconsistency in approach.

Respondent’s Arguments

  • The Revenue relied on the alleged mismatch in turnover figures to justify reopening.
  • However, no counter-affidavit was filed despite multiple opportunities granted by the Court.

Court’s Findings / Order

  • The Court observed that objections filed by the petitioner were not dealt with by the Assessing Officer.
  • In absence of a counter-affidavit, the assertions of the petitioner were accepted.
  • The reassessment notice dated 31.03.2021 and order dated 29.12.2021 were set aside.
  • Liberty was granted to the Assessing Officer to initiate fresh proceedings in accordance with law after considering:
    • Petitioner’s objections
    • Past treatment in AY 2015–16 and 2016–17

Important Clarifications

  • Reassessment beyond four years requires strict compliance with disclosure conditions.
  • Failure to deal with objections renders reassessment proceedings unsustainable.
  • Consistency across assessment years is a relevant consideration in tax proceedings.
  • Procedural lapses (like non-filing of counter affidavit) can significantly impact the outcome.

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/59027032023CW19222022_120537.pdf

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