Facts of the Case

  • The petitioner challenged a notice dated 27.03.2022 under Section 148, issued pursuant to an order under Section 148A(d).
  • A show cause notice under Section 148A(b) dated 21.03.2022 alleged bogus LTCG from shares of Achal Investments Ltd.
  • The notice contained contradictory assessment years (2015–16 and 2018–19).
  • Relevant annexures/evidence were not provided to the petitioner.
  • The petitioner had already:
    • Declared LTCG in AY 2015–16
    • Completed assessment under Section 143(3)
    • Opted for Vivad se Vishwas Scheme
  • Despite submission of reply and documents, the authority passed an adverse order stating no reply was filed.

 

Issues Involved

  1. Whether reassessment proceedings under Sections 148/148A are valid when:
    • Notice contains contradictory facts and assessment years
    • Relevant material is not supplied
  2. Whether passing order without considering reply violates natural justice
  3. Whether reassessment can be sustained when foundational notice is defective

 

Petitioner’s Arguments

  • No minimum statutory time (7 days) was granted to respond
  • Notice was self-contradictory regarding assessment years
  • Supporting documents/annexures were not furnished
  • LTCG issue already assessed in AY 2015–16
  • Order under Section 148A(d) was factually disconnected from show cause notice
  • Authority wrongly recorded that no reply was filed

 

Respondent’s Arguments

  • Two separate notices were issued for AY 2015–16 and AY 2018–19
  • Allegations:
    • AY 2015–16 → Bogus LTCG
    • AY 2018–19 → Accommodation entries from Naresh Jain group
  • Admitted:
    • Technical glitch led to wrong annexure being served
    • Allegation of suppression was withdrawn

 

Court’s Findings / Order

  • The Court held that:
    • The petitioner was not provided proper opportunity
    • The annexure supplied was irrelevant and pertained to another assessment year
    • There was clear violation of principles of natural justice

Order:

  • The following were quashed:
    • Notice under Section 148A(b)
    • Order under Section 148A(d)
    • Notice under Section 148 (AY 2018–19)
  • Liberty granted to Revenue to initiate fresh proceedings as per law

 

Important Clarification by Court

  • Reassessment proceedings must strictly comply with:
    • Proper disclosure of material
    • Clear and consistent allegations
    • Adequate opportunity of hearing
  • Technical errors (like wrong annexures) cannot prejudice taxpayer rights
  • Violation of natural justice renders proceedings invalid

 

Sections Involved

  • Section 148, Income Tax Act, 1961
  • Section 148A(b), Income Tax Act, 1961
  • Section 148A(d), Income Tax Act, 1961
  • Section 143(3), Income Tax Act, 1961
  • Principles of Natural Justice


Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:2064-DB/MMH25052022CW68802022_181404.pdf

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