Facts of the Case

The present writ petition was filed challenging the notice dated 23.05.2022 issued under Section 148A(b) of the Income Tax Act, 1961, along with the subsequent order dated 29.07.2022 passed under Section 148A(d) and the consequential notice issued under Section 148 of the Act.

The case pertains to Assessment Year 2016–2017. The petitioner also initially challenged CBDT instructions dated 11.05.2022, however, this ground was not pressed during the hearing.

A key factual issue arose due to inconsistency between:

  • Information available on the Insight Portal, and
  • The figures mentioned in the notice under Section 148A(b)

Specifically, the alleged escaped income was stated as:

  • ₹60,41,400/- in the notice under Section 148A(b), and
  • ₹42,18,000/- in the case-related information.

Despite the petitioner informing the Assessing Officer about this discrepancy through a reply dated 06.06.2022, the proceedings continued without rectification.

Issues Involved

  1. Whether reassessment proceedings initiated under Sections 148A(b), 148A(d), and 148 are valid when there is inconsistency in the alleged escaped income.
  2. Whether failure of the Assessing Officer to consider the taxpayer’s response amounts to non-application of mind.
  3. Whether such discrepancy impacts the applicability of limitation under Section 149(1)(b) of the Income Tax Act.

Petitioner’s Arguments

  • The petitioner contended that there was a clear discrepancy in the quantum of escaped income between the notice and the underlying information.
  • It was argued that despite bringing this inconsistency to the notice of the Assessing Officer, no corrective action was taken.
  • The petitioner asserted that the proceedings were mechanically continued without proper verification or application of mind.
  • Hence, the impugned notices and order were liable to be quashed.

Respondent’s Arguments

  • The Revenue fairly conceded that there existed a mismatch between the information received from the Insight Portal and the figures mentioned in the notice under Section 148A(b).
  • However, the Assessing Officer proceeded to pass the order under Section 148A(d), revising the escaped income to ₹42,18,000/-.

Court’s Findings / Order

The Delhi High Court held:

  • There was clear non-application of mind by the Assessing Officer in proceeding with reassessment despite acknowledged discrepancies.
  • The inconsistency in figures demonstrated lack of proper verification before initiating proceedings.

Accordingly:

  • The order passed under Section 148A(d) and the notice issued under Section 148 were set aside.
  • Liberty was granted to the Assessing Officer to initiate fresh proceedings in accordance with law.
  • The Court directed that:
    • Relevant material must be furnished before proceeding further.
    • Adequate opportunity of hearing must be provided to the petitioner.

Important Clarification by the Court

  • If the escaped income is ₹42,18,000/-, the Revenue must satisfy the conditions under Section 149(1)(b).
  • If the escaped income is ₹60,41,400/-, the Assessing Officer must provide material justifying such computation.
  • Reassessment cannot be sustained on inconsistent or unverified data.

Sections Involved

  • Section 148A(b) – Inquiry before issuance of notice
  • Section 148A(d) – Order deciding whether it is a fit case for notice
  • Section 148 – Income escaping assessment
  • Section 149(1)(b) – Time limit for issuance of notice

Link to download the order -   https://delhihighcourt.nic.in/app/showFileJudgment/59027012023CW10132023_143451.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.