Case Law Details
Vinayak Services PVT LTD Vs ITO (Delhi High Court)
Introduction: In a notable legal development, the case of Vinayak Services PVT LTD vs ITO (Delhi High Court) has come to the forefront. This case centers around the quashing of a Section 148A(d) order issued by the Income Tax Officer (ITO) on the grounds that the underlying Section 148 notice was time-barred. The Delhi High Court’s judgment in this case holds significant implications for the realm of tax assessment procedures, shedding light on the importance of adherence to procedural and statutory requirements.
Analysis: The crux of the matter lies in the petitioner’s plea to annul an order and notice issued under Sections 148A(d) and 148 of the Income Tax Act, 1961, respectively. These impugned documents were founded on a notice dated 28.06.2021 issued under Section 148 of the Act for the Assessment Year 2014-2015. However, the petitioner’s legal counsel contends that the notice was dispatched on 14.07.2021, which, as per their argument, renders the subsequent proceedings time-barred.
A crucial legal angle in this case is the petitioner’s assertion that the income alleged to have escaped assessment had already been subjected to taxation in the hands of the creditor under Section 68 of the Income Tax Act. This raises pertinent questions about the legality of pursuing reassessment in light of previously taxed amounts.
To support their case, the petitioner’s legal representative refers to a judgment rendered by a coordinate bench of the Delhi High Court on September 27, 2022, involving similar issues. This previous judgment, titled Suman Jeet Agarwal vs. Income Tax Officer, is cited as a precedent that lends weight to the petitioner’s contention regarding the time-barred notice.
In response to the petitioner’s arguments, the respondent’s legal representative acknowledges that the issue of limitation is indeed covered by the aforementioned judgment in Suman Jeet Agarwal. However, in regard to the second aspect involving the taxation of the escaped income, the respondent’s stance remains unexpressed, as it is not explicitly stated in the counter-affidavit.
Conclusion: The judgment delivered by the Delhi High Court in the Vinayak Services PVT LTD vs ITO case underscores the paramount importance of adhering to statutory timelines and procedural requirements when it comes to the issuance of notices under the Income Tax Act. By quashing the Section 148A(d) order due to a time-barred Section 148 notice, the court reiterates the significance of maintaining procedural integrity and adhering to legal timelines in tax assessment proceedings. This ruling serves as a crucial reminder for both tax authorities and entities involved in the taxation process, emphasizing the need to uphold procedural standards and ensure compliance with statutory provisions.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The substantive prayer made in the writ petition reads as follows:
“a. Issue an appropriate Writ, direction or order quashing and setting aside the Order passed u/s 148A(d) and notice u/s 148 of the Income Tax Act, 1961 both dated 22.07.2022, issued by the Respondent No.1 and quash the reassessment proceedings initiated subsequent thereto and/or”
2. The record shows, that the aforementioned impugned order dated 22.07.2022 passed under Section 148A(d) and the notice of even date i.e., 22.07.2022 issued under Section 148 of the Income Tax Act, 1961 [in short, “the Act”] were predicated on the notice dated 28.06.2021 issued under Section 148 of the Act.
3. This notice concerns Assessment Year (AY) 2014-2015. [See Annexure P-4 appended on page 84 of the case file].
3.1 A perusal of the copy of the e-mail appended on page 85 of the case file shows that the said notice dated 28.06.2021 was dispatched on 14.07.2021.
4. According to Mr Vishal Agarwal, who appears on behalf of the petitioner, proceedings were therefore time barred as the window available to the respondent/revenue for issuance of fresh notices under the new regime was available only between 01.04.2021 and 30.06.2021.
5. Since in this case the notice was dispatched only on 14.07.2021, the proceedings are time barred.
5.1. In support of his plea, Mr Agarwal relies upon the judgment of a coordinate bench of this Court dated 27.09.2022 passed in a bunch of matters, one of which included W.P.(C) 10/2022, titled Suman Jeet Agarwal vs. Income Tax Officer.
6. Besides this, Mr Agarwal submits that the income that is chargeable to tax, which according to the respondents/revenue has escaped assessment has also been taxed in the hands of the creditor under Section 68 of the Act. 6.1 For this purpose, our attention is also drawn to the order dated 24.08.2022 passed by the coordinate bench, at the stage when the notice was issued in the writ petition.
7. Mr Puneet Rai, who appears on behalf of the respondents/revenue, cannot but accept that insofar as the first aspect is concerned i.e., limitation, the same is covered by the judgment rendered by the coordinate bench in Suman Jeet Agarwal.
7.1 Insofar as second aspect is concerned, Mr Rai says that there is no specific assertion in the counter-affidavit. Therefore, quite clearly, the department has not taken a stand either way, on the assertion made that the said amount has been taxed in the hands of the creditor.
8. Thus, for the foregoing reasons we are inclined to set aside the impugned order passed under Section 148A(d) and notice issued under Section 148 of the Act.
9. The writ petition is disposed of in the aforesaid terms.
10. Consequently, the pending applications shall stand closed.
