Delhi HC Directs Readjudication: Assessment Order u/s 148A(b) Invalid for Escaped Income Below Rs. 50 Lakhs

Praveen Bansal Vs ITO (Delhi High Court)

The Delhi High Court has addressed the case of Praveen Bansal Vs ITO, concerning the assessment order under Section 148A(b) of the Income Tax Act. The petitioner has challenged the order and the notice issued, as well as the Instruction No.1 of 2022 dated 11.05.2022 provided by the CBDT. The court acknowledged that no response was submitted by the petitioner to the notice under Section 148A(b) and highlighted the transactions mentioned in the case-related information detail (CRID). The petitioner’s stand that the alleged escaped income would be below Rs. 50 lakhs if a certain transaction is excluded was noted, although it was raised after the passing of the impugned order.

Analysis: The court recognized that the petitioner’s stand was not presented in a timely manner. However, considering the assertion made by the petitioner in their reply and the discrepancy regarding the alleged transaction, the court directed the Assessing Officer to verify the claims and provide a personal hearing to the petitioner before passing the assessment order. This direction aims to ensure fairness and proper examination of the facts.

Conclusion: In the case of Praveen Bansal Vs ITO, the Delhi High Court directed readjudication, emphasizing that the assessment order under Section 148A(b) of the Income Tax Act is invalid if the escaped income is below Rs. 50 lakhs. The court highlighted the need for verification and a personal hearing to address the petitioner’s assertions before proceeding with the assessment order.

FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT

1. Allowed, subject to just exceptions.

W.P.(C) 6054/2023 and CM APPL. 23695/2023 [Application filed on behalf of the petitioner seeking interim relief]

2. This writ petition concerns Assessment Year (AY) 20 14-15.

3. The petitioner/assessee has assailed via the instant writ petition, the order dated 20.07.2022 passed under Section 148A(d) of the Income Tax Act, 1961 [in short “Act”]

3.1  Besides this, challenge is also laid to the notice dated 29.05.2022 issued under Section 148A(b) of the Act.

3.2 In addition thereto, there is also a challenge laid to Instruction No.1 of 2022 dated 11.05.2022, issued by the CBDT.

4. Ms Ananya Kapoor, learned counsel, who appears on behalf of petitioner/assessee, fairly concedes that no response was submitted by the petitioner/assessee to the aforementioned notice issued under Section 148A(b) of the Act.

4.1 Ms Kapoor’s contention is that a reply was filed on 30.04.2023. In this context, Ms Kapoor draws our attention to Annexure P-16 appended on page 117 of the case file.

4.2 It is Ms Kapoor’s contention that the Case Related Information Detail (CRID) furnished along with notice issued under Section 148A(b) of the Act, refers to the following transactions:

4.3 Ms Kapoor says that a perusal of the reply filed by the petitioner/assessee, albeit after the impugned order was passed under Section 148A(d), would show that the petitioner/assessee has taken the stand that he did not enter into any transaction with Dayanand Singh, as alleged by the respondent/revenue, or at all. Ms Kapoor submits that if the amount alleged to have been transacted with Dayanand Singh, i.e., Rs. 33,81,000/- is taken out of the equation, the alleged escaped income would be below Rs.50 lakhs.

5. Unfortunately for the petitioner/assessee, this stand was not taken in time.

6. Given this position, the writ petition is disposed of, with a direction that before the Assessing Officer proceeds to pass an assessment order, he would verify the assertion made by the petitioner/assessee which is recorded in the reply, and in this context, also accord personal hearing to the petitioner/assessee and/or his authorised representative.

7. Consequently, pending application shall also stand closed.