Facts of the Case

The petitioner, North End Foods Marketing Pvt. Ltd., challenged the order passed under Section 148A(d) and the consequential notice issued under Section 148 of the Income Tax Act for Assessment Year 2013–14.

The Income Tax Department issued a show cause notice alleging that the petitioner was involved in high-value transactions amounting to ₹1.5 crore with entities allegedly engaged in providing accommodation entries. The Department further noted that no response was received to an earlier notice under Section 133(6).

The petitioner filed a reply raising objections primarily on limitation and procedural grounds but did not substantively address the nature of the transactions in the reply to the show cause notice.

Subsequently, the Assessing Officer initiated reassessment proceedings on the ground that income had escaped assessment.

Issues Involved

  1. Whether reassessment proceedings under Sections 148 and 148A were validly initiated.
  2. Whether the petition was maintainable under Article 226 when disputed questions of fact were involved.
  3. Whether limitation under Section 149 barred reopening of the assessment.
  4. Whether failure to respond on merits justified reassessment proceedings.

Petitioner’s Arguments

  • The reassessment proceedings were barred by limitation under Section 149.
  • The procedure prescribed under Section 148A was not properly followed.
  • CBDT instructions were contrary to the Supreme Court judgment in Union of India v. Ashish Agarwal.
  • The Assessing Officer failed to consider earlier replies submitted in response to notices under Section 133(6).
  • Relevant documents evidencing transactions had already been furnished.

Respondent’s Arguments

  • The petitioner was a beneficiary of accommodation entries from a shell entity.
  • The transactions were not genuine and required detailed factual examination.
  • The petitioner failed to provide substantive explanation regarding the nature and purpose of the transaction.
  • The matter involved disputed questions of fact unsuitable for writ jurisdiction.

Court’s Findings / Order

  • The Court observed that the petitioner failed to address the merits of the allegations in its reply to the show cause notice.
  • Earlier replies were not properly referred to in subsequent responses.
  • The petitioner did not provide adequate explanation or supporting documents regarding the nature of the transaction.
  • The dispute involved factual determination, which cannot be adjudicated in writ jurisdiction.

The Court relied on the Supreme Court judgment in
Commissioner of Income Tax v. Chhabil Das Agarwal
to hold that when statutory remedies are available, writ jurisdiction should not be invoked.

Final Order

  • Writ petition dismissed.
  • Liberty granted to the Assessing Officer to decide the matter independently on merits.

Important Clarifications by the Court

  • Writ jurisdiction under Article 226 is not maintainable where disputed questions of fact exist.
  • The Income Tax Act provides a complete mechanism for reassessment and redressal.
  • Courts will not interfere at the stage of reassessment unless exceptional circumstances are shown.
  • Observations made by the Court shall not influence the Assessing Officer during adjudication.

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:4024-DB/58923092022CW137792022_192952.pdf

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