Charu Chains and Jewels Pvt. Ltd. Vs ACIT (Delhi High Court)
The Hon’ble Delhi High Court in Charu Chains and Jewels Pvt. Ltd. v. Assistant Commissioner of Income Tax [W. P. (C) 17577/2022 dated December 22, 2022] set aside the reassessment order against the assessee, on the grounds of non-supply of the information/ material by the Revenue Department for reopening of assessment. Held that, the underlying information/material which forms the basis of triggering the assessment/reassessment proceedings must be furnished to the assessee. Further, directed the Revenue Department to furnish the underlying material concerning the assessee within 3 weeks, to grant personal hearing and, thereafter, take decisions in accordance with law.
Facts:
This petition has been filed by M/s. Charu Chains and Jewels Pvt. Ltd. (“the Petitioner”) against the order dated July 25, 2022 (“the Impugned Order”) passed under Section 148A(d) of the Income Tax Act, 1961 (“the IT Act”) and the consequential notice of even date i.e. July 25, 2022, issued under Section 148 of the IT Act (“the Impugned Notice”) concerning Assessment Year (“AY”) 2016-17.
While carrying out the assessment for the AY 2017-18 the Assessing Officer (“AO”) came across certain unsecured transaction entered into amongst three entities amounting to a total INR 2.7 crore and passed the Impugned Order and the consequent Impugned Notice forming the following views:
i. the lenders were either not found or were entities just for the purpose of making entries in the books of account;
ii. At least two of the three lenders had presumably struck off their names from the register maintained by the Registrar of Companies;
iii. There were common directors and the directors of two companies did not respond to the summons issued by the AO; and
iv. The lenders had nominal incomes and did not have the potential to lend the amounts.
The Petitioner vide partial reply dated May 31, 2022 made to the Revenue Department (“the Respondent”) sought for the information/materials pertaining to the enquiries made by the AO, inspection/enquiry report, any other related report/document and any other material relied upon by the Respondent.
The Petitioner contended that, the Impugned Order not being passed within one month from the date of reply as prescribed in Section 148A(d) is not sustainable.
Issue:
Whether the Impugned Order was passed within the time-frame as mentioned in Section 148A(d) of the IT Act?
Held:
The Hon’ble Delhi High Court in W. P. (C) 17577/2022 of 2022 held as under:
