Facts of the Case

The present writ petition was filed challenging the order dated 29.03.2022 passed under Section 148A(d) of the Income Tax Act, 1961, along with consequential notice dated 04.04.2022 issued under Section 148 for Assessment Year 2018-19.

The Respondent alleged that the Petitioner had made an investment of ₹85,85,500/- which was not disclosed in the Income Tax Return. A show cause notice dated 16.03.2022 under Section 148A(b) was issued, requiring a response by 21.03.2022.

The Petitioner submitted a detailed reply on 24.03.2022 explaining that the investment was made through proper channels. However, the Assessing Officer passed the impugned order without properly considering the reply.

Issues Involved

  1. Whether passing an order under Section 148A(d) without granting minimum statutory time violates principles of natural justice.
  2. Whether non-consideration of the assessee’s reply violates the mandatory requirement under Section 148A(c) of the Income Tax Act.
  3. Whether such an order renders reassessment proceedings under Section 148 invalid.

Petitioner’s Arguments

  • The show cause notice did not provide the mandatory minimum period of seven days as required under law.
  • The detailed reply dated 24.03.2022 was not considered while passing the order.
  • The alleged investment had already been explained with supporting documents and proper financial channels.
  • The impugned order was passed mechanically and in violation of principles of natural justice.

Respondent’s Arguments

  • The Revenue contended that income had escaped assessment for AY 2018-19.
  • It relied on the order under Section 148A(d) stating that ₹85,85,500/- was not disclosed in the Petitioner’s ITR.

Court Findings / Judgment

  • The impugned order was passed in great haste and in violation of principles of natural justice, as reasonable opportunity was not granted.
  • The Assessing Officer failed to consider the Petitioner’s reply dated 24.03.2022, which was already on record.
  • Section 148A(c) mandates that the reply of the assessee shall be considered before passing an order under Section 148A(d).
  • The Court relied on the precedent in Fena Pvt. Ltd. vs. ACIT Circle 7-1 & Anr., where similar action was quashed.

Court Order

  • The order under Section 148A(d) and notice under Section 148 were quashed.
  • The matter was remanded back to the Assessing Officer.
  • Direction issued to pass a fresh reasoned order after duly considering the Petitioner’s reply.

Important Clarification by Court

  • The term “shall” under Section 148A(c) imposes a mandatory duty on the Assessing Officer to consider the assessee’s reply.
  • Any order passed without such consideration is legally unsustainable.
  • Adequate opportunity of hearing is an essential component of reassessment proceedings.

Sections Involved

  • Section 148 – Income escaping assessment
  • Section 148A(a), 148A(b), 148A(c), 148A(d) – Procedure before issuing notice
  • Principles of Natural Justice

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:1950-DB/MMH18052022CW76252022_175706.pdf

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