Facts of the Case

The petitioner challenged the order dated 13.04.2023 passed under Section 148A(d) of the Income Tax Act, 1961, along with the consequential notice dated 14.04.2023 issued under Section 148.

The petitioner, a non-resident since Assessment Year 2006-07, received a notice under Section 148A(b) dated 04.03.2023 at his parents’ residence on 24.03.2023. The notice required submission of a reply by 21.03.2023, which had already lapsed by the time of receipt.

Subsequently, the petitioner sought adjournment on 25.03.2023 and filed a reply on 30.03.2023. However, the impugned order proceeded on the assumption that no reply had been filed.

Issues Involved

  1. Whether passing an order under Section 148A(d) without considering the reply filed by the petitioner amounts to a violation of principles of natural justice.
  2. Whether reassessment proceedings initiated under Section 148 are valid when procedural safeguards under Section 148A are not properly followed.

Petitioner’s Arguments

  • The petitioner contended that there was a clear violation of principles of natural justice, as his reply dated 30.03.2023 was not considered.
  • The notice under Section 148A(b) was received after the deadline for filing a reply, making compliance within time impossible.
  • Despite requesting adjournment and submitting a reply, the authority wrongly recorded that no reply had been filed.

Respondent’s Arguments

  • The Revenue relied on the available records and did not file a counter-affidavit.
  • However, during proceedings, the respondent fairly conceded that the reply filed by the petitioner ought to have been considered before passing the impugned order.

Court’s Findings / Order

  • The Delhi High Court held that non-consideration of the petitioner’s reply constitutes a violation of principles of natural justice.
  • The Court observed that the proper course would be to set aside the impugned order and allow a fresh decision.

Order:

  • The order passed under Section 148A(d) and the consequential notice under Section 148 were set aside.
  • Liberty was granted to the Assessing Officer to conduct a de novo assessment.
  • The Assessing Officer was directed to:
    • Consider the reply filed by the petitioner
    • Provide an opportunity of personal hearing

Important Clarification

  • Even if a reply is filed belatedly or after seeking adjournment, it must be duly considered before passing an order under Section 148A(d).
  • Procedural fairness and adherence to natural justice principles are mandatory in reassessment proceedings.
  • Failure to consider taxpayer submissions renders reassessment proceedings legally unsustainable.

Sections Involved

  • Section 148A(d) – Order for initiation of reassessment
  • Section 148A(b) – Show cause notice before reassessment
  • Section 148 – Notice for reassessment

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/60808052023CW59062023_145252.pdf

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