Facts of the Case

The present writ petition was filed by the petitioner challenging:

  • The order passed under Section 148A(d) of the Income Tax Act, 1961; and
  • The notice issued under Section 148 dated 22 July 2022 for Assessment Year 2017–18.

The reassessment proceedings were initiated alleging that the petitioner had taken bogus accommodation entries from entities controlled by one individual.

The petitioner contended that:

  • No such transactions were ever undertaken;
  • The information relied upon by the department was incorrect;
  • Even basic identifying details such as pin code and mobile number did not match the petitioner.

Issues Involved

  1. Whether reassessment proceedings under Sections 148 and 148A(d) can be sustained without providing specific and relevant material to the assessee.
  2. Whether failure to consider the petitioner’s reply violates principles of natural justice.
  3. Whether vague information without details of transactions or bank accounts is sufficient to reopen assessment.

Petitioner’s Arguments

  • The proceedings were initiated based on incorrect and vague information.
  • The petitioner had never entered into any transaction with the alleged entities.
  • The reply submitted under Section 148A(b) was not considered by the Assessing Officer.
  • The impugned order lacked application of mind and failed to address objections raised.

Respondent’s Arguments

  • The Revenue relied on information from the insight portal indicating tax evasion.
  • It was argued that:
    • The petitioner’s name and PAN appeared in the data;
    • Transactions of ₹25 lakhs and ₹68 lakhs were linked to certain entities.

Court’s Findings / Order

  • The information provided to the petitioner did not specify bank accounts or transaction details.
  • The impugned order failed to disclose where or how the alleged amounts were received.
  • Mere allegation of bogus accommodation entries without supporting particulars is insufficient.

Final Order

  • The order under Section 148A(d) and notice under Section 148 were set aside.
  • The matter was remanded back to the Assessing Officer for fresh determination.
  • The Assessing Officer was directed to:
    • Provide additional information within 4 weeks;
    • Allow the petitioner to respond;
    • Pass a fresh order in accordance with law.

Important Clarifications by Court

  • Reassessment cannot be based on vague or incomplete information.
  • Proper opportunity and full disclosure of material must be given to the assessee.
  • The decision reaffirmed adherence to principles of natural justice.
  • Rights and contentions of both parties were kept open.

Sections Involved

  • Section 148 – Income escaping assessment
  • Section 148A(b) – Inquiry before notice
  • Section 148A(d) – Order for issuance of notice
  • Income Tax Act, 1961

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:4118-DB/MMH07102022CW136162022_174503.pdf

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