Case Law Details
United Associates Vs ITO (Delhi High Court)
A Writ Petition was filed in Hon’ble Delhi high Court to set aside the notice dated 28.06.2022 issued by the Income Tax Department under section 148 of the Income Tax Act, 1961 and order u/s 148A(d) issued by the Respondent No.1 under section 148 of the Income Tax Act, 1961 and thereby quashing the subsequent proceedings thereto for the Assessment Year 2016-17.
The Petitioner firm filed the Return of Income for the year under consideration i.e. A.Y. 2016-17 on 05-10-2016 by reflecting income of Rs.1975000. After that the return was subjected to complete scrutiny assessment for the A.Y. 2016-17. During the Assessment the case was discussed at length before the then ITO and the returned income of the assessee firm was accepted vide assessment order dated 27-12-2018 and same issues were discussed on the basis of which the Case of the petitioner is reopened. After that re-assessment proceedings were initiated and the Notice u/s.148 dated 31-03-2021 was issued. The Petitioner filed return of income in response to the notice u/s.148 on 12-04-2021. Petitioner objected the same as Assessment was completed u/s 143(3) on the same issues.In connection with the said reassessment proceedings the Petitioner made exhaustive submissions. The Petitioner argued as the said proceedings are devoid of merits and bad in law. In substantiation to the Petitioner’s contention the relevant details and evidences are submitted by the Petitioner. The said evidences are placed on record. Accordingly, the assessment was made as per the income returned on 31.03.2022.
That After that Hon’ble Supreme Court vide its judgment dated 04.05.2020 in the case of Union of India vs Ashish Agarwal has held the notice issued u/s 148 during the period beginning on 1st April 2021 and ending with 30th June 2021, to be a show cause notice u/s 148A(b) of the Income Tax Act, 1961. Hon’ble Supreme Court also held that these reassessment notices issued u/s 148 under the old law shall be deemed to be show cause notice issued under clause (b) of Section 148A of the new law substituted with effect from 1st April 2021.
That in pursuance of the above said Judgment Respondent no.1 a fresh notice was issued
2. Hon’ble Supreme Court has held that these reassessment notices issued u/s 148 under the old law shall be deemed to be the show cause notice issued under clause (b) of section 148A of the new law substituted with effect from 1st April, 2021. A notice u/s 148 for the A.Y. 2016-17 has been issued to you on 31.03.2021. The judgment applies to all cases where extended reassessment notices have been issued irrespective of the fact whether such notices have been challenged or not.
3. In this regard, in compliance with the subject order of the Hon’ble Supreme Court, you are hereby provided with the information and material relied upon by this office for issue of the show cause notice as above. The details of which are provided as under: “
1. In this case information was received from the Investigation Wing, Noida vide lette. As per the contents of the information, a search operation was carried out on 30.09.2015 on the premises on the of M/s Airwil Group of cases and during the search/post search investigation, it was found that unaccounted money amounting to Rs.16.97 Crores was advanced by the assessee in the form of loans/advances to M/s Airwil Group of companies. The assessee also received monthly installment of Rs.16,97,500/- per month @12% per annum from the M/s Airwil Group of companies. In this regard, the copy of following documents is being given to you:
(a) The copy of relevant information.”
In accordance with aforesaid judgment Petitioner was required to furnish the reply regarding why reassessment u/s 147 of the Income Tax Act may not be made. The reply was required to be furnished within two weeks (14 days) from the receipt of the letter/notice. Petitioner was requested to submit the response in ‘e-proceedings’ facility through account in e-filing portal of the Income Tax Department.
That In response to opportunity provided to the Petitioner u/s 148A (b) of the Act, the Petitioner submitted the response In the reply, the Petitioner furnished that
“In this connection, it is bring to your kind notice that notice u/s 148 in the case of the assessee was issued vide DIN & Notice No. ITBA/AST/S/148/202021/1032106731(1) dated 31.03.2021. All the compliances and submissions to notice u/s 143(2) and 143(1) were duly replied with complete details and all the required information were filed within the given time. The case has been decided vide order passed u/s 147 read with section 144 read with section 144B of the Income Tax Act, 1961 dated 31.03.2022 accepting the returned income of the assessee, vide assessment order DIN ITBA/AST/S/147/202122/1042391960(1). (Page no.30)
after considering the Reply of Petitioner Respondent no.1 Passed the following order:-
In the assessee’s case notice u/s 148 of the Act was issued and digitally singed on 31.03.2021 at 07:56 pm, however, the notice was sent and delivered to the assessee on 01.04.2021 (ITBA delivery status through email sent time stamp 01.04.2021 at 05:52:08 am and delivered time stamp 01.04.2021 at 05:52:12 am). The notice u/s 148 of the I.T. Act issued and digitally singed on 31.03.2021 at 07:56 pm, however, the notice was sent and delivered through ITBA on 01.04.2021. Therefore, the validity of the notice for reassessment issued as detailed above in case of the assessee is nonest in view of the decision of the Hon’ble Supreme Court as the notice u/s 148 of the Act was sent on 01.04.2021 at 05:52:08 am and delivered on 01.04.2021 at 05:52:12 am. Further, it is mentioned that the extended reassessment notices are deemed to be show cause notice u/s 148A of the Act in accordance with the judgement of Hon’ble Supreme Court. Therefore, all requirements of new law prior to that show cause notices shall be deemed to have been complied with. In view of the above facts and explanation by the assessee it is a fit case to initiate proceedings u/s 148 of the Income Tax Act, 1961. This order u/s 148A(d) of the Act is being passed with prior approval of the Principal Commissioner of Income Tax, Delhi-12, New Delhi.(Page no.27)
The said order and notice are passed inspite of the fact that Assessment Order pursuant to notice issued u/s 148 dated 31.03.2021 has already been passed.
That Hon’ble Delhi High Court after Considering Arguments said that this Court is of the prima facie view that the respondents-revenue cannot reassess the petitioner for the third time and that too when the reassessment order dated 31st March, 2022 has been passed on merits accepting the petitioner’s returned income.At the Request of Revenue Counsel allowed to file a counter affidavit within four weeks and further directed that Till further orders, there shall be a stay of the reassessment proceedings.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
Allowed, subject to all just exceptions.
Accordingly, the application stands disposed of.
W.P.(C) 12190/2022 & CM APPL.36474/2022
Present writ petition has been filed challenging the order passed under Section 148A(d) of the Income Tax Act, 1961 [‘the Act’] and the notice issued under Section 148 of the Act both dated 28th June, 2022 for Assessment Year 2016-17.
Learned counsel for the petitioner states that the petitioner filed its return of income for the relevant year on 5th October, 2016 declaring an income of Rs.19,75,000/-. He states that the case of the Petitioner was picked up for scrutiny and after examination of all the submissions of the Petitioner, an assessment order dated 27th December, 2018 under Section 143(3) read with Section 144B was passed without making any additions and accepting the returned income of the Petitioner.
He further states that the reassessment proceedings against the petitioner were initiated in case of the Petitioner vide notice dated 31st March, 2021 under Section 148 of the Act. He states that the Petitioner filed its return of income in response to the reassessment Notice and also filed its objections against the initiation of the proceedings on the ground that assessment for the same year and same issues had been completed under Section 143(3) of the Act.
He states that after considering the replies and the various documents submitted by the Petitioner, a reassessment order dated 31st March, 2022 under Section 147 read with Section 144B of the Act was passed accepting the returned income of the Petitioner.
Learned counsel for the petitioner states that the Petitioner was issued another notice dated 30th May, 2022 under Section 148A(b) of the Act seeking to initiate reassessment proceedings against the Petitioner for the relevant assessment year i.e. 2016-17 by stating that the reassessment notice issued to the Petitioner under Section 148 of the Act was dated 31st March, 2021, and so the Petitioner was being provided with information and material relied upon by the officer for initiating reassessment proceedings in compliance with the directions given by the Supreme Court in Union of India v. Ashish Agarwal, 2022 SCC OnLine SC 543 in cases where the extended reassessment notices have been issued. He states that the petitioner filed its objections to the show cause notice, wherein it stated that all compliances regarding the notice dated 31st March, 2021 issued under Section 148 of the Act had been completed by the Petitioner and the returned income of the petitioner had been accepted by the Assessing officer vide order dated 31st March, 2022 passed under Section 147 read with Section 144B of the Act.
Learned counsel for the petitioner states that after considering the reply of the Petitioner, the Respondent rejected the same saying that in accordance with the decision of the Supreme Court in Ashish Agarwal (supra), the notice delivered to the petitioner on 1st April, 2021 at 05.52.12 AM was non-est and the show cause notice under Section 148A(b) issued to the Petitioner was in accordance with law.
Having heard learned counsel for the petitioner, this Court is of the prima facie view that the respondents-revenue cannot reassess the petitioner for the third time and that too when the reassessment order dated 31st March, 2022 has been passed on merits accepting the petitioner’s returned income.
Issue notice.
Mr.Zoheb Hossain, learned Senior Standing Counsel for the respondents-revenue, accepts notice. He prays for and is permitted to file a counter affidavit within four weeks. Rejoinder affidavit, if any, be filed before the next date of hearing. Till further orders, there shall be a stay of the reassessment proceedings.
List on 23rd February, 2023.
Nitin Gulati(Advocate)
Delhi High Court
Mobile-9313133000
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