In a recent ruling, the Delhi High Court stated that clerical mistakes in reassessment notices can be corrected, but ignoring clear errors in assessment orders is not acceptable.
The case involved Monish Gajapati Raju Pusapati, who challenged a reassessment notice issued under Section 148 of the Income Tax Act, 1961, for Assessment Year (AY) 2020-21. The Income Tax Department issued this notice based on information collected under Section 135A, which flagged a cash deposit of Rs. 22,44,647 as unverified.
The notice mistakenly attached the financial details of another taxpayer, Manisha Jain, who was not related to the petitioner. The petitioner objected to this mistake on 13.09.2024, arguing that the reassessment was based on incorrect information and violated due process.
The counsel stated that the department did not issue a proper show cause notice under Section 148A, which is required before reopening an assessment. The tax authorities dismissed his objections on 03.02.2025 without properly addressing the mistake.
The Income Tax Department argued that Section 135A allows tax authorities to collect information, and Explanation 1(iv) to Section 148 lets them bypass the usual procedure under Section 148A of the Income Tax Act.
They argued that the incorrect attachment of another taxpayer’s details was just a clerical error, which did not affect the reassessment itself. They also claimed that Section 292B of the Income Tax Act protects notices from being invalidated due to minor procedural mistakes.
The bench comprising Justice Tushar Rao Gedela And Chief Justice Devender Kumar Upadhyay acknowledged that the department made an error but ruled that this mistake alone does not automatically make the reassessment invalid.
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The court also found that dismissing the petitioner’s objections without properly addressing the mistaken identity was unfair. The court clarified that Section 292B does not apply to serious mistakes that affect a taxpayer’s right to fair proceedings.
The court quashed the order, which rejected the petitioner’s objections. The reassessment notice was not completely canceled, but the tax department was ordered to correct the mistake and provide the petitioner with the correct financial details within a week.
The petitioner was given a fresh opportunity to respond before reassessment could proceed. The writ petition was partly allowed.
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