Facts of the Case

The petitioner filed a writ petition challenging the notice issued under Section 148A(b) dated 27.05.2022 and the order passed under Section 148A(d) dated 22.07.2022 for Assessment Year 2013–14.

The allegation against the petitioner was that it was a beneficiary of accommodation entries amounting to ₹5.80 crores routed through Neotex Vinimay Private Limited, allegedly controlled by an entry operator.

The petitioner contended that it had received an unsecured loan through proper banking channels (RTGS) and had already furnished relevant documents including bank statements, audit reports, balance sheet, and computation of income in response to a notice under Section 133(6).

However, no supporting material forming the basis of the allegation was supplied to the petitioner.

 Issues Involved

  1. Whether reassessment proceedings under Sections 148A(b) and 148A(d) are valid without furnishing the underlying material relied upon by the Assessing Officer.
  2. Whether non-supply of material violates principles of natural justice.
  3. Whether such reassessment proceedings are liable to be set aside with liberty for fresh action.

 Petitioner’s Arguments

  • The petitioner argued that the loan transaction was genuine and executed through banking channels.
  • All relevant financial documents were duly submitted in response to earlier notices.
  • No material or evidence supporting the allegation of accommodation entries was furnished by the department.
  • The reassessment proceedings were thus arbitrary and violative of natural justice.

 Respondent’s Arguments

  • The Revenue contended that the petitioner was a beneficiary of accommodation entries routed through an entity controlled by an alleged entry operator.
  • The reassessment proceedings were initiated based on information available with the department.

 Court Order / Findings

The Delhi High Court held that:

  • The order passed under Section 148A(d) and consequential notice under Section 148 cannot be sustained where material relied upon has not been furnished to the assessee.
  • The impugned order dated 22.07.2022 and notice were set aside.
  • Liberty was granted to the Assessing Officer to initiate proceedings afresh in accordance with law.

 Important Clarification by Court

  • The Assessing Officer must furnish all material and information relied upon before proceeding further.
  • The petitioner must be given an opportunity of personal hearing.
  • The petitioner shall be allowed to file a supplementary reply upon receipt of fresh material.
  • Proceedings may be conducted through video conferencing.

 Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/59010022023CW17542023_145432.pdf

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