Case Law Details
Meera Gupta Vs ACIT (Delhi high court)
In a significant ruling, the Delhi High Court has restrained the Income Tax Department from taking any further actions pursuant to an order passed under Section 148A(d) of the Income Tax Act, 1961. This decision came as part of the judgment in the case of Meera Gupta vs. ACIT, shedding light on the legal interpretations and precedents affecting reassessment procedures.
The case, Meera Gupta vs. Assistant Commissioner of Income Tax (ACIT), revolves around the Income Tax Department’s reassessment order under Section 148A(d) of the Income Tax Act. This section pertains to the procedure for reassessment, requiring a notice to be issued before any reassessment order. Meera Gupta, the petitioner, challenged the reassessment order citing procedural lapses and relying on past judicial precedents.
The court noted that the respondent was represented by Mr. Kumar, who was granted a period of six weeks to file a reply, with the petitioner given two weeks thereafter to file a rejoinder affidavit. This procedural timeline ensured that both parties had adequate time to present their arguments comprehensively.
The Delhi High Court observed that the reassessment action was unsustainable at a prima facie level. This observation was based on the fact that a previous search assessment had been annulled by the Income Tax Appellate Tribunal (ITAT). The ITAT’s decision referenced key judgments from the Supreme Court and the Delhi High Court in Principal Commissioner of Income Tax vs. Abhisar Buildwell and Commissioner of Income-tax vs. Kabul Chawla.
The court heavily relied on the precedents set in the aforementioned cases. In Abhisar Buildwell, the Supreme Court held that reassessment could not be based solely on observations from an annulled search assessment. Similarly, the Kabul Chawla case reinforced that any reassessment must be backed by substantive evidence and not merely procedural anomalies.
The court acknowledged a similar challenge in WP(C) 3585/2024, indicating a consistent judicial approach towards reassessment challenges.
Consequently, the court restrained the Income Tax Department from proceeding with any further steps based on the impugned order and notice dated 21 February 2024. This restraint highlights the court’s stance on ensuring adherence to legal procedures and preventing arbitrary reassessment actions.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
CM APPL. 34039/2024 (Ex.)
1. Allowed subject to all just exceptions.
2. Application stands disposed of.
W.P.(C) 8291/2024 & CM APPL. 34038/2024 (Stay)
3. Since the respondent is duly represented by Mr. Kumar, learned counsel, let a reply be filed within a period of six weeks from today. The petitioner shall have two weeks therefrom to file a rejoinder affidavit.
4. Let the matter be called again on 27.09.2024.
5. Prima facie we find ourselves unable to sustain the reassessment action bearing in mind the undisputed fact that the earlier search assessment came to be annulled with the Income Tax Appellate Tribunal resting its decision on the judgments rendered in Principal Commissioner of Income Tax vs Abhisar Buildwell [(2024) 2 SCC 433] and Commissioner of Income-tax vs. Kabul Chawla [2015 SCC OnLine Del 11555].
6. The present action is based solely on certain observations as appearing in Abhisar Buildwell. We take note of an identical challenge which has been entertained in WP(C) 3585/2024.
7. Accordingly, and for the aforesaid reasons, we restrain the respondents from taking further steps pursuant to the impugned order passed under Section 148A(d) of the Income Tax Act, 1961H[“Act”] and notice under Section 148 of the Act, both dated 21 February 2024.
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