Facts of the Case

  • The petitioner challenged the order dated 9 April 2022 passed under Section 148A(d) along with consequential notice under Section 148.
  • The reassessment was initiated based on information received through the Risk Management Strategy of CBDT, indicating alleged undisclosed cash payment of ₹75,34,000 for purchase of a commercial property.
  • The information originated from a search conducted on Sangini Group, Surat, where documents allegedly linked the petitioner to “on-money” transactions.
  • The Assessing Officer issued notice under Section 148A(b), considered the reply, and passed order under Section 148A(d) followed by issuance of notice under Section 148.

Issues Involved

  1. Whether reassessment proceedings under Section 148A are valid when the case falls under Section 153C.
  2. Whether proviso (c) to Section 148A bars initiation of proceedings in such circumstances.
  3. Whether the impugned notice and order suffer from jurisdictional error.

Petitioner’s Arguments

  • The petitioner contended that the case squarely falls under Section 153C, which deals with assessments arising out of search and seizure.
  • It was argued that proviso (c) to Section 148A explicitly excludes applicability of Section 148A in such cases.
  • Therefore, initiation of proceedings under Section 148A was without jurisdiction and legally unsustainable.

Respondent’s Arguments

  • The Revenue submitted that information suggesting escaped income was received through risk management systems and search-related material.
  • It justified initiation of proceedings under Section 148A based on Explanation 1 to Section 148.
  • However, during proceedings, the Revenue admitted that the case falls under Section 153C.

Court’s Findings / Order

  • The Delhi High Court held that:
    • The case is admittedly covered under Section 153C.
    • Proviso (c) to Section 148A clearly excludes applicability of Section 148A in such cases.
  • Consequently:
    • The impugned order under Section 148A(d) and notice under Section 148 were held untenable in law.
    • Both were set aside.
    • The matter was remanded to the Assessing Officer for passing a fresh order in accordance with law.

Important Clarification

  • Section 148A cannot be invoked where:
    • Documents or assets are seized during search proceedings relating to another person; and
    • The case falls within the scope of Section 153C.
  • This judgment reinforces the jurisdictional limitation of reassessment provisions post the Finance Act amendments.

Sections Involved

  • Section 148 – Income escaping assessment
  • Section 148A – Procedure before issuance of notice
  • Section 153C – Assessment of income of any other person (search cases)
  • Section 132 / 132A – Search and seizure provisions
  • Section 151 – Sanction for issue of notice

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:1903-DB/MMH17052022CW71152022_192736.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.