Facts of the Case

The Petitioner, Civitech Developers Private Limited, filed a writ petition challenging the order passed under Section 148A(d) of the Income Tax Act, 1961 and the consequential notice issued under Section 148 for Assessment Year 2016–17, both dated 27 July 2022.

The reassessment proceedings were initiated based on information received from the Sub-Registrar Office, Noida, indicating sale of immovable property amounting to approximately ₹7.74 crore by the assessee.

The Petitioner contended that it had already submitted a detailed reply dated 8 June 2022 to the show cause notice issued under Section 148A(b), but the same was not considered while passing the impugned order.

Issues Involved

  1. Whether the order passed under Section 148A(d) without considering the assessee’s reply violates the principles of natural justice.
  2. Whether reassessment proceedings initiated under Section 148 are valid when the reply of the assessee is ignored.
  3. Scope of judicial interference in reassessment proceedings at the writ stage.

Petitioner’s Arguments

  • The impugned order and notice were passed in gross violation of natural justice, as the detailed reply submitted by the assessee was not considered.
  • The Petitioner had provided explanations regarding revenue recognition under the percentage completion method, including details of sale transactions.
  • Non-consideration of reply renders the proceedings arbitrary and unsustainable in law.

Respondent’s Arguments

  • The Revenue relied on information received from the Investigation Wing and SRO Noida, indicating undisclosed transactions of immovable property.
  • It was contended that the notice under Section 148 was valid in view of the Supreme Court judgment in Union of India vs Ashish Aggarwal (2022).
  • Reliance was also placed on judicial precedents including:
    • Touchstone Holding Pvt. Ltd. vs ITO (Delhi High Court)
    • Raymond Woollen Mills Ltd. vs ITO (Supreme Court)
  • The Respondent argued that sufficiency of material cannot be examined at the stage of reopening.

Court Order / Findings

  • The reply filed by the Petitioner was not considered while passing the order under Section 148A(d).
  • Such non-consideration amounts to a violation of principles of natural justice. Accordingly, the Court:
  • Set aside the impugned order under Section 148A(d) and notice under Section 148.
  • Remanded the matter back to the Assessing Officer for fresh adjudication on merits within eight weeks.
  • Granted liberty to the Petitioner to file supporting documents (sale deeds, ledger accounts, bank statements) within three weeks.

Important Clarification

  • The Court clarified that merits of the case were not adjudicated.
  • The decision is limited to ensuring compliance with procedural fairness and natural justice.
  • The Assessing Officer must pass a fresh reasoned order after considering the assessee’s reply.

Sections Involved

  • Section 148 – Income escaping assessment
  • Section 148A(b) – Show cause notice before reassessment
  • Section 148A(d) – Order deciding whether it is a fit case for reassessment
  • Section 149 – Time limit for notice

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:4052-DB/MMH28092022CW128512022_180643.pdf  

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