Devat And Ram Company Private Limited Vs ITO (Delhi High Court)
Delhi High Court has set aside a notice issued under Section 148A(b) and a consequential order passed under Section 148A(d) of the Income Tax Act, 1961, effectively quashing reassessment proceedings against Devat And Ram Company Private Limited for Assessment Year 2020-21. The court ruled that the Assessing Officer (AO) had invalidly rejected the assessee’s comprehensive response merely by relying on unverified information from an “insight portal,” without adequately examining the evidence provided by the assessee or controverting the facts.
The petitioner, Devat And Ram Company Private Limited, approached the High Court challenging the Section 148A(b) notice dated March 21, 2024, the subsequent Section 148A(d) order dated March 31, 2024, and the Section 148 notice also dated March 31, 2024. The core of the petitioner’s argument was that the reassessment proceedings were initiated without sufficient, verifiable information indicating escaped assessment, and that the AO failed to properly consider the detailed explanation and evidence furnished.
The Basis of the Reassessment Notice
The impugned Section 148A(b) notice indicated that it was based on information from an “insight portal,” which suggested that the petitioner had made “bogus purchases” from “dummy companies/entities.” Specifically, the information, originating from the DDIT(Inv.), Rourkela, cited that M/s Devat Ram and Company Pvt. Ltd. had made bogus purchases of Rs. 2,93,02,072/- from M/s Madhumita Steel Industries Pvt. Ltd. (MSIPL), which was alleged to be a dummy entity.
