The Division Bench of the Delhi High Court in the case of Rajnish Puri vs Assistant Commissioner of Income Tax, Circle 43(1), Delhi & Ors.consisting of JusticesManmohan and Manmeet Pritam Singh Aroraobserved that the allegation in the notice issued u/s 148A(b) of the Income Tax Act has to be precise, so that the assessee has a fair and reasonable opportunity to put forward its defence. If allegation in the notice is incorrect or vague, the Assessee would be deprived of an opportunity of putting forward its defence and Section 148A(b) would be rendered nugatory.
Facts
According to Section 148 of the Income Tax Act, if a person’s taxable income has evaded the IT department's assessment, an Assessing Officer will issue a notice to provide the appropriate documentation to demonstrate that they are in compliance with tax laws.
This writ petition was filed challenging the order passed u/s 148A(d) of the Income Tax Act, 1961 (‘Act’) and the consequential notice issued u/s 148 of the Act for the Assessment Year 2014-15. The assessment of the Assessee was reopened based on information uploaded on INSIGHT portal stating that a search u/s 132 of the Act had resulted in seizure of unaccounted cash of Rs.19.37 crores along with incriminating digital as well as documentary evidence.As per the impugned Order, the Assesseewas found to be a beneficiary of accommodation entry of fictitious loan of Rs.63,06,250/- during Financial Year 2013-14.
Contentions Made
Petitioner: The information on which the reassessment proceeding had been initiated was incorrect and the assumption of jurisdiction was completely flawed.
Respondent: This is a case is of ‘fictitious long term capital gain’ arising out of trading in certain shares.
Observations of the Court
The Bench noted that that both in the notice issued u/s 148A(b) of the Act as well as in the Dissemination of Information note supplied to the Petitioner, the allegation is of a ‘fictitious loan’ and not ‘fictitious long term capital gain’ of Rs.63,06,250/-.
It further noted that the allegation in the notice issued u/s 148A(b) of the Act has to be precise, so that the assessee has a fair and reasonable opportunity to put forward its defence. If the allegation in the notice is incorrect or vague, the Assessee would be deprived of an opportunity of putting forward its defence and Section 148A(b) would be rendered nugatory.
Judgment
The impugned order and the notice issued u/s 148 of the Act were set aside and the Petitioner-Asseesseewas given an opportunity to file a response to the notice u/s 148A(b) of the Act within three weeks. The Assessing Officer was directed to pass a fresh order u/s 148A(d) of the Act within four weeks thereafter.
Case:Rajnish Puri vs Assistant Commissioner of Income Tax, Circle 43(1), Delhi & Ors.
Citation: W.P.(C) 11482/2022
Bench: Justice Manmohan, JusticeManmeet Pritam Singh Arora
Decided on: 5thAugust 2022
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