Facts of the Case

The present writ petition was filed by the Petitioner challenging:

  • Show Cause Notice dated 15.03.2022 issued under Section 148A(b) of the Income Tax Act, 1961
  • Order dated 31.03.2022 passed under Section 148A(d)
  • Notice dated 31.03.2022 issued under Section 148

All relating to Assessment Year 2018–19.

The Respondent alleged that the Petitioner had made an incorrect claim of IGST refund, which required disallowance.

The Petitioner contended that the IGST refund is reflected in the balance sheet and not in the profit and loss account, and therefore cannot be treated as income escaping assessment.

Issues Involved

  1. Whether an IGST refund, being a balance sheet item, can be treated as income escaping assessment under Section 147 of the Income Tax Act.
  2. Whether reassessment proceedings initiated under Sections 148 and 148A were valid in law.
  3. Whether the impugned order violated the principles of natural justice.
  4. Whether non-service of notice at the correct email address vitiates the proceedings.

Petitioner’s Arguments

  • The IGST refund is not income, as it is not reflected in the profit and loss account and hence cannot fall within the scope of “income escaping assessment” under Section 147.
  • The show cause notice was illegal and without jurisdiction.
  • The order under Section 148A(d) and notice under Section 148 were passed in gross violation of natural justice, as:
    • No proper opportunity to file a reply was given
    • An adjournment request was ignored
  • The Petitioner became aware of the notice only later because it was sent to a wrong email address.
  • The order suffered from non-application of mind and contained incorrect facts.

Respondent’s Arguments

  • The Respondent fairly conceded that:
    • The Petitioner did not get an adequate opportunity to file a reply
    • The order under Section 148A(d) was not passed on merits
  • Therefore, the Respondent had no objection if the matter was remanded back to the Assessing Officer for fresh consideration.

Court’s Findings / Order

The Delhi High Court held:

  • The impugned:
    • Order under Section 148A(d)
    • Notice under Section 148

are set aside.

  • The matter is remanded back to the Assessing Officer for fresh adjudication.
  • Directions issued:
    • Petitioner to file additional reply within two weeks
    • Assessing Officer to pass a reasoned order within eight weeks thereafter
  • The Court clarified that:
    • It has not expressed any opinion on merits
    • All rights and contentions are kept open

Important Clarification

  • The judgment reinforces that procedural fairness and opportunity of hearing are essential in reassessment proceedings under Sections 148 & 148A.
  • Even where revenue has information, non-compliance with natural justice vitiates proceedings.
  • The Court emphasized remand as a corrective mechanism, not adjudication on merits.

Sections Involved

  • Section 147 – Income Escaping Assessment
  • Section 148 – Issue of Notice for Reassessment
  • Section 148A(b) – Show Cause Notice before Reassessment
  • Section 148A(d) – Order after considering reply


Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:2184-DB/MMH01062022CW85862022_191129.pdf

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