Facts of the Case

  • The case pertains to Assessment Year 2013–2014.
  • The petitioner was accused of being a beneficiary of accommodation entries from:
    • Gopalpriya Commercial Pvt. Ltd.
    • Lookline Vincom Pvt. Ltd.
  • The alleged amount of bogus unsecured loans was ₹50,00,221.
  • The Assessing Officer (AO) claimed that this amount represented income escaping assessment.
  • The petitioner contended that one transaction was counted twice, inflating the alleged escaped income.

Issues Involved

  1. Whether the order passed under Section 148A(d) was valid in law.
  2. Whether the AO erred in computing escaped income by double-counting transactions.
  3. Whether reassessment proceedings can continue without proper application of mind and material evidence.
  4. Whether principles of natural justice were adhered to.

Petitioner’s Arguments

  • The AO wrongly duplicated a transaction, thereby artificially increasing the alleged escaped income.
  • Bank statements were submitted to demonstrate that only one genuine transaction existed.
  • No material evidence was provided by the Revenue to justify the existence of two separate transactions of ₹10,00,055 each.
  • The conclusion that escaped income exceeded ₹50 lakhs was irrational and unsupported by evidence.

Respondent’s Arguments

  • The Revenue relied on the material available on record.
  • It was suggested that the matter may be remitted back to the Assessing Officer for fresh consideration.

Court Order / Findings

  • The Delhi High Court set aside the impugned order dated 30.07.2022 passed under Section 148A(d).
  • The Court observed that the issue required re-examination by the AO.
  • Liberty was granted to the AO to conduct fresh proceedings in accordance with law.
  • The AO must:
    • Issue fresh notice
    • Provide an opportunity of hearing
    • Specify date and time clearly
  • All consequential proceedings automatically stand quashed upon setting aside the order.

 Important Clarification


  • The Court did not adjudicate on merits of the alleged accommodation entries.
  • The ruling is primarily based on procedural irregularity and improper evaluation of material.

The reassessment process must strictly follow fairness, accuracy, and due application of mind.

Sections Involved

  • Section 148A(d), Income Tax Act, 1961
  • Section 148, Income Tax Act, 1961
  • CBDT Instruction No. 1/2022 dated 11.05.2022

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/60803052023CW57662023_164845.pdf

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