2 days time to file Response to Income Tax Notice: Delhi HC quashes Notice u/s 148A(d) of Income Tax Act [Read Order]

The Delhi High Court quashed notice issued under Section 148A(d) of the Income Tax Act, 1961 as there was only 2 days time to file response to the income tax notice.

The record showed that the petitioner, Srivenkateshwar Tradex Private Limited, was issued a notice dated 05.03.2023 under Section 148A(b) of the Income Tax Act, 1961 [“Income Tax Act”], with regard to the bogus purchases allegedly made by it from two suppliers i.e., Jatalia Global Ventures Ltd. [“JGVL”] and RCI Industries & Technologies Ltd. [“RCI”]. The value of the bogus purchases qua each of these suppliers was placed at Rs.21,00,24,258/-.

The cumulative value of the transactions with these two entities pegged at Rs.49,40,45,269/-. It appeared that as per the said notice, the petitioner was required to file its response on or before 13.03.2023. The record showed that on 13.03.2023, based on the request of the petitioner, an extension was granted, and accordingly, the petitioner was called upon to file its response on or before 16.03.2023.

It appeared that, thereafter, another notice dated 27.03.2023 was issued to the petitioner under Section 148A(b) of the Income Tax Act, whereby the petitioner was called upon to respond to the allegations contained therein, albeit, on or before 29.03.2023.

The Assessing Officer (AO), however, was not persuaded by the responses furnished on behalf of the petitioner and, thus, proceeded to pass the impugned order under Section 148A(d) of the Income Tax Act.

The counsel for the petitioner submitted that the adjudication concerning these show-cause notices is pending and therefore, the fact that the proceedings were triggered under the allied statutes, simpliciter, could not be taken as information, without due application of mind for triggering reassessment proceedings under the Income Tax Act.

Besides this, it was also submitted that insofar as the allegations made against the petitioner with regard to the fictitious purchases made from RPPL was concerned, the AO gave the petitioner barely two (2) days to file a response, which is contrary to the provisions of the Income Tax Act.

A Division Bench comprising Justices Rajiv Shakdher and Girish Kathpalia observed that “Therefore, we would be entering into an area of uncertainty if we were to accept that in this case, the two (2) days granted to the petitioner via the notice dated 27.03.2023 was sufficient. The statute, as indicated above, provides a specific timeframe and therefore, that leeway would have to be granted to the assessee. Having regard to the fact that the responses to notices form part of the impugned order dated 31.03.2023 passed under Section 148A(d) of the Income Tax Act, in our view, the best way forward would be to set aside the said order with liberty to the AO to pass a fresh order.”

To Read the full text of the Order CLICK HERE

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