Facts of the Case

The present writ petition was filed challenging the order dated 21 April 2022 passed under Section 148A(d) of the Income Tax Act, 1961 along with the notice issued under Section 148 for Assessment Year 2018–19.

The reassessment proceedings were initiated by the Revenue on the allegation that the petitioner had not filed her Income Tax Return (ITR) and that income amounting to ₹30,57,78,545/- had escaped assessment based on certain financial transactions.

However, the petitioner contended that she had already filed her ITR and disclosed all relevant transactions, except one transaction of ₹3,79,08,575/- of which she had no knowledge and for which details were sought from the department.

Issues Involved

  1. Whether reassessment proceedings under Section 148 and order under Section 148A(d) can be sustained when based on incorrect factual assumptions.
  2. Whether the Assessing Officer is required to consider and record findings on the taxpayer’s reply before passing an order under Section 148A(d).
  3. Whether non-consideration of filed ITR and disclosures vitiates reassessment proceedings.

Petitioner’s Arguments

  • The petitioner had duly filed the Income Tax Return for AY 2018–19.
  • All financial transactions were disclosed in the return, except one alleged transaction for which no knowledge existed.
  • The reassessment proceedings were initiated on an incorrect assumption that no return was filed.
  • No details of the alleged undisclosed transaction were provided by the department.
  • The statement under Section 285BA(1) is merely reporting by financial institutions and cannot be treated as conclusive evidence of undisclosed income. 

Respondent’s Arguments

  • The petitioner failed to provide supporting documents such as sale/purchase deeds.
  • The transaction of ₹3,79,08,575/- remained unexplained.
  • The Assessing Officer proceeded based on available financial information indicating escapement of income.

Court’s Findings / Order

The Delhi High Court observed:

  • The primary basis of the reassessment notice was that the petitioner had not filed the ITR.
  • This fact was specifically rebutted by the petitioner.
  • The Assessing Officer failed to record any finding on this crucial issue in the order under Section 148A(d).

Final Order:

  • The impugned order under Section 148A(d) and notice under Section 148 were set aside.
  • The matter was remanded back to the Assessing Officer for fresh consideration.
  • The Assessing Officer was directed:
    • To issue a supplementary notice detailing alleged undisclosed transactions within 2 weeks.
    • The petitioner to file documents and reply within 4 weeks.
    • A fresh order to be passed thereafter in accordance with law.

Important Clarifications by the Court

  • Orders under Section 148A(d) must reflect application of mind and deal with the taxpayer’s response.
  • Reassessment proceedings cannot be sustained on incorrect factual assumptions.
  • Proper opportunity and detailed reasoning are mandatory before initiating reassessment.
  • Reporting under Section 285BA(1) is not conclusive proof of undisclosed income.

 Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:3488-DB/MMH05092022CW127332022_110027.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.