Indure Private Limited Vs PCIT (Supreme Court of India)
Summary: The Supreme Court of India, in Indure Private Limited Vs PCIT, declined to interfere with the judgment of the Delhi High Court concerning reassessment proceedings initiated against the assessee for Assessment Year 2013-14. The High Court had dismissed the company’s writ petition challenging an order dated 29 June 2022 passed under Section 148A(d) of the Income-tax Act, 1961, and the consequential reassessment notice dated 30 June 2022 issued under Section 148. The Supreme Court, finding no sufficient ground to interfere, dismissed the special leave petition and disposed of pending applications. Consequently, the High Court’s decision remained undisturbed.
The dispute arose from a show-cause notice dated 20 May 2022 alleging escapement of income. The petitioner contended that the documents accompanying the notice were illegible and unreadable, preventing it from preparing an effective response. It submitted a preliminary reply on 25 May 2022 requesting legible copies of the material relied upon by the Assessing Officer. According to the petitioner, readable copies, together with additional documents, were supplied only on 18 June 2022. Nevertheless, the Assessing Officer passed the order under Section 148A(d) on 29 June 2022, followed by a notice under Section 148 on 30 June 2022.
The petitioner relied upon the Supreme Court’s decision in Union of India & Ors. Vs Ashish Agarwal, 2022 SCC OnLine SC 543, to argue that it should have been granted two weeks to submit objections. It maintained that the period ought to have commenced when the readable documents were furnished on 18 June 2022, allowing it until 2 July 2022 to respond. The company also sought reopening of the income-tax portal for three working days to file its reply. Its principal grievance was that the reassessment order had been passed without granting a reasonable opportunity to address the material relied upon by the department.
The Revenue disputed these allegations and submitted that legible documents had been supplied at the initial stage itself. According to the department, another set was furnished on 18 June 2022 merely as an additional precaution. Revenue counsel also questioned the genuineness of certain bills produced by the petitioner, pointing out that they allegedly lacked supplier addresses and mobile numbers. Similar deficiencies were alleged in transportation bills, including the absence of consignor addresses. The Revenue therefore maintained that the reassessment proceedings were supported by material requiring examination.
The Delhi High Court considered the principles of natural justice and referred to judicial precedents recognising that procedural fairness must be evaluated according to the circumstances of each case. The Court examined the statement of an alleged supplier, Baburam Samasi, who acknowledged that certain bank accounts stood in the name of his proprietary concern, R B Fabrication, but denied conducting the transactions reflected in one of those accounts. He alleged that another individual had obtained signed cheque leaves and access to banking instruments and might have operated the accounts. The High Court regarded this statement as material warranting further examination in reassessment proceedings.
The High Court held that a prima facie case of escapement of income existed and that issuance of the notice under Section 148 was justified at that stage. It also observed that the dispute concerning whether legible copies had originally been supplied could not appropriately be resolved in the writ proceedings. Accordingly, the writ petition and pending application were dismissed. However, the High Court expressly directed that the Assessing Officer should decide the matter independently on its merits without being influenced by observations made in the judgment.
When the matter reached the Supreme Court, the Court issued a brief order stating that it found no good ground or reason to interfere with the impugned judgment. The special leave petition was accordingly dismissed, along with any pending applications. The Supreme Court did not undertake a separate detailed examination of the reassessment allegations or the disputed documents. The practical consequence was that the reassessment proceedings could continue, subject to the High Court’s direction that the Assessing Officer independently examine the merits. The dismissal of the special leave petition should not be treated as a final determination of the alleged escaped income or the genuineness of the disputed transactions.
Related Reading: The Delhi High Court’s judgment in Indure Private Limited Vs PCIT – Reassessment Notice Upheld on Prima Facie Bogus Transactions examines the underlying reassessment proceedings under Sections 148A(d) and 148.
Cases Discussed
- Union of India & Ors. Vs Ashish Agarwal, 2022 SCC OnLine SC 543 — Cited by the petitioner regarding the opportunity to respond to reassessment notices.
- Chairman, Board of Mining Examination and Chief Inspector of Mines Vs Ramjee, citation appearing in the supplied text as (1997) 2 SCC 256 — Referred to regarding the flexible application of principles of natural justice.
- M/s Tikara Vs State of M.P. & Ors., AIR 1997 SC 1691 — Cited regarding the application of natural justice according to the circumstances of each case.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
We do not find any good ground and reason to interfere with the impugned judgment and hence, the special leave petition is dismissed.
Pending application(s), if any, stand disposed of.
