Facts of the Case

The present writ petition was filed 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 2017–18.

The Petitioner contended that:

  • A notice under Section 148A(b) was issued on 18 May 2022.
  • The Petitioner requested the material relied upon on 01 June 2022.
  • However, the relevant material forming the basis of alleged escapement of income was supplied only on 19 July 2022 with a direction to respond by 21 July 2022.
  • The Petitioner sought adjournment and filed its reply on 26 July 2022.
  • The impugned order dated 29 July 2022 was passed without considering the reply.

Issues Involved

  1. Whether failure to grant adequate time to respond under Section 148A(b) violates principles of natural justice.
  2. Whether the Assessing Officer is mandatorily required to consider the reply of the assessee before passing an order under Section 148A(d).
  3. Whether the impugned reassessment proceedings were legally sustainable in absence of proper compliance with statutory procedure. 

Petitioner’s Arguments

  • The Petitioner argued that the material relied upon was supplied belatedly, leaving insufficient time to respond.
  • It relied on Union of India vs Ashish Agarwal (2022 SCC OnLine SC 543), asserting that at least two weeks must be provided after supplying material.
  • Despite filing a reply within extended time, the Assessing Officer failed to consider it.
  • This amounted to violation of principles of natural justice.

Respondent’s Arguments

  • The Revenue accepted notice and supported the validity of the impugned order and reassessment proceedings.
  • It contended that the proceedings were conducted in accordance with law.

Court Findings / Order

  • The Court held that the assessee must be granted adequate and reasonable opportunity under Section 148A to respond to the show cause notice.
  • It observed that Section 148A(b) permits granting up to 30 days, extendable upon request.
  • The Court relied on its earlier decision in Meenu Chaufla vs ITO (WP(C) 7854/2022), holding that the Assessing Officer is bound to consider the reply before passing an order under Section 148A(d).
  • Failure to consider the reply amounts to violation of statutory mandate.

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 after taking into account the Petitioner’s reply.
  • The Assessing Officer was directed to pass a fresh order within four weeks.

Important Clarification

  • The Court clarified that all rights and contentions of both parties are kept open.
  • The decision emphasizes strict compliance with procedural safeguards under reassessment provisions.

Sections Involved

  • Section 148 – Income escaping assessment
  • Section 148A(b) – Opportunity of being heard
  • Section 148A(c) – Consideration of reply
  • Section 148A(d) – Order deciding initiation of reassessment

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:3466-DB/MMH02092022CW126542022_182900.pdf

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