AO cannot Traverse beyond its Mandate to Assume Jurisdiction u/s 147 of Income Tax Act: Delhi HC [Read Order]

The Delhi High Court recently held that the Assessing Officer cannot traverse beyond its mandate to assume jurisdiction under Section147 of the Income Tax Act, 1961.

The present writ petition has been filed at the instance of the assessee challenging the notice dated 31 March 2018 issued under Section 148 and subsequent order dated 25 September 2018 under Section 148A(d) of the Income Tax Act, 1961, disposing of the petitioner’s objections against the impugned notice for Assessment Year [“AY”] 2011-12.

The respondent, thus, provided a copy of the reasons recorded stating that the reopening is sought on the basis of the information received from the Investigation Wing, Delhi pertaining to a person namely, Mr. Manoj Sethi, who had deposited an enormous amount of cash in his bank account but failed to furnish the source of such deposits. It is the case of the respondent that Mr. Manoj Sethi had various transactions with the petitioner but he was unable to furnish sufficient evidence in respect of the identification, creditworthiness and genuineness of the transactions.

Salil Aggarwal, counsel appearing on behalf of the petitioner submitted that the respondent has erroneously assumed jurisdiction under Section 147 of the Income Tax Act on the wrong premise that the petitioner had entered into any cash transaction with Mr. Manoj Sethi.

The counsel further submitted that the petitioner had duly supplied copies of bank account statements during the assessment proceedings and therefore, there is no reason to conclude that the petitioner had failed to disclose truly and fully all material facts necessary for assessment. It is, therefore, urged by the respondents that the instant reassessment proceedings are only based upon the change of opinion of the AO as the assessment qua the petitioner had already been carried out on at least two occasions at an earlier point in time.

A Division Bench of Justices Yashwant Varma and Purushaindra Kumar Kaurav observed that “In the instant case, the petitioner has not been able to allude to any enquiry either expressly or indirectly conducted by the respondent in the earlier assessment proceedings qua the issue under consideration, which could suggest that the present proceedings are merely based upon a change of opinion. Thus, the AO cannot be said to have traversed beyond its mandate to assume jurisdiction under Section 147 of the Income Tax Act.”

To Read the full text of the Order CLICK HERE

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