Facts of the Case

The present writ petition was filed challenging:

  • Notice dated 18 May 2022 issued under Section 148A(b),
  • Order passed under Section 148A(d), and
  • Subsequent notice issued under Section 148 dated 22 July 2022 for Assessment Year 2014–15.

The allegation against the petitioner was that it had received accommodation entries amounting to Rs. 2,73,02,153 from twenty-eight alleged bogus entities maintained by one individual. However, the notice failed to disclose the names or details of such entities.

The petitioner contended that despite having a large turnover and substantial genuine transactions, it was not provided adequate details to respond effectively.

Issues Involved

  1. Whether reassessment proceedings under Section 148A are valid when material information is not disclosed to the assessee.
  2. Whether failure to provide specific details violates principles of natural justice.
  3. Whether vague allegations in a show cause notice can sustain reassessment proceedings.

Petitioner’s Arguments

  • The Revenue failed to comply with the law laid down in Union of India vs Ashish Agarwal.
  • The show cause notice contained vague and unsupported allegations.
  • Names of the alleged bogus entities were not disclosed.
  • The petitioner was denied a meaningful opportunity to respond.
  • This amounted to a clear violation of principles of natural justice.

Respondent’s Arguments

  • The petitioner had received accommodation entries from one of the alleged bogus entities (Raj Trading Company).
  • The Revenue possessed bank details and supporting material.
  • Relevant documents were produced before the Court during proceedings.

Court’s Findings / Order

  • The Court held that the Assessing Officer must provide specific material and information under Section 148A(b) to enable an effective response.
  • The impugned notices were found to be vague and lacking necessary details, making it impossible for the assessee to respond properly.
  • The Court observed that requiring the assessee to respond to such vague allegations was akin to searching for a “needle in a haystack.”

Order Passed

  • The order under Section 148A(d) and notice under Section 148 were set aside.
  • The Revenue was directed to:
    • Issue a supplementary notice with all relevant material within three weeks,
    • Allow the petitioner to respond within three weeks thereafter,
    • Pass a fresh order under Section 148A(d) in accordance with law.

Important Clarification

  • The Court clarified that it had not expressed any opinion on merits of the case.
  • All rights and contentions of the parties were kept open.

 Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:3443-DB/MMH01092022CW125052022_165359.pdf

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