Case Law Details
Riya Gangwani Vs ACIT (Delhi High Court)
Introduction: The Delhi High Court (HC) dealt with a writ petition filed by Riya Gangwani against the Assistant Commissioner of Income Tax (ACIT) pertaining to the Assessment Year (AY) 2019-20. The matter revolved around reassessment notices and an order passed without proper consideration of the assessee’s replies. The Court’s intervention led to a critical ruling, setting aside the order in question.
Analysis:
1. Sequence of Events: The petitioner received two notices under Section 148A(b) of the Income Tax Act and responded to both. Despite providing the required documents, the Assessing Officer (AO) recorded that no response was received.
2. Principal Allegation: The case against Gangwani was based on fictitious transactions involving the purchase of shares and being a beneficiary of an accommodation entry.
3. Failure to Consider Evidence: The HC noted the AO’s failure to consider the replies and documents provided by the petitioner, such as the bank statement and D-MAT account for the relevant year.
4. Setting Aside the Order: The Court, without delving into the merits of the case, set aside the order dated 24.03.2023 under Section 148A(d) and the consequent notice under Section 148 of the Act.
5. Fresh Order & Hearing: The HC provided liberty to the AO to pass a fresh order, taking into account the petitioner’s reply, and also directed a personal hearing with proper notice.
Conclusion: The Delhi HC’s decision in the case of Riya Gangwani vs ACIT underscores the importance of adhering to proper procedural conduct and ensuring that an assessee’s responses are diligently considered. By setting aside the reassessment order and providing direction for a new order, the Court reinforced the principles of natural justice. This ruling serves as a reminder to tax authorities to exercise their powers responsibly, guaranteeing that due process is followed. It also emphasizes the vital role of the judiciary in protecting individual rights against administrative oversights.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. This writ petition concerns Assessment Year (AY) 2019-20.
2. Issue notice.
2.1 Mr Shailendera Singh, learned senior standing counsel, accepts notice on behalf of the respondents/revenue.
3. In view of the direction that we intend to pass, Mr Singh says that no counter-affidavit is required to be filed, and he will rely on the record presently available with the court.
4. Via the instant writ petition, the petitioner seeks to assail the following notices and orders:
(i) Notices dated 06.03.2023 and 20.03.2023 issued under Section 148A(b) of the Income Tax Act, 1961 [in short, “Act”].
(ii) Order dated 24.03.2023 issued under Section 148A(d) of the Act.
(iii) Consequential notice of even date, i.e., 24.03.2023 issued under Section 148 of the Act.
5. It is evident that the petitioner was served with two (2) notices under Section 148A(b) of the Act.
6. The record shows that the petitioner had filed replies vis-a-vis both notices.
6.1 A reply vis-a-vis the first notice was filed on 16.03.2023.
6.2 Likewise, a reply vis-à-vis the second notice was filed on 22.03.2023.
7. The principal allegation against the petitioner is that it has registered fictitious transactions involving purchase of shares.
7.1 It is alleged that the petitioner is a beneficiary of an accommodation entry.
8. The value fixed by the Assessing Office (AO) qua these transactions is Rs.27,16,180/-.
9. It is important to note that via the second notice dated 20.03.2023 issued to the petitioner, the AO had sought copies of the bank statement, as well as D-MAT account concerning Financial Year (FY) 2018-19 [AY 2019-20].
9.1 The petitioner while filing its reply dated 23.03.2023, had furnished a copy of the bank statement and the D-MAT account.
10. Curiously, while penning down the order dated 24.03.2023 under Section 148A(d) of the Act, the AO in paragraph 5 notes that the petitioner had not responded to the show cause notice issued under Section 148 A(b) of the Act.
10.1 This observation has been made, despite the fact that the first reply dated 16.03.2023, is extracted in the body of the said order. Furthermore, it appears that the bank statement and the D-MAT for the concerned AY have not been noticed.
11. Given this position, without getting into the merits of the matter, we are inclined to set aside the impugned order dated 24.03.2023 passed under Section 148 A(d), and the consequent notice of even date, i.e., 24.03.2023 issued under Section 148 of the Act.
11.1 It is ordered accordingly.
12. That being said, liberty is given to the AO to pass a fresh order, albeit after taking into account the reply filed by the petitioner.
13. The AO will also accord personal hearing to the petitioner.
13.1 For this purpose, the AO will also issue notice to the petitioner, indicating therein the date and time of hearing.
14. The above-captioned writ petition is disposed of, in the aforesaid terms.
14.1 The pending application shall stand closed.
15. Parties will act based on the digitally signed copy of the order.
