Delhi HC dismisses Petition against Reopening of Assessment u/s 148, affirms Validity of Notice [Read Order]
The court clarified that their ruling addressed only the legality of the notice, without making any pronouncement on the merits of the reassessment itself
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Delhi-High-Court-Delhi-HC-Petition-Delhi-HC-Dismisses-Petition-Reopening-of-Assessment-TAXSCAN
In the recent ruling,the High Court of Delhi,affirmed the validity of a notice issued under Section 148 of the Income Tax Act,1961,dismissing the petition filed by the petitioner against the reopening of its assessment for the Assessment Year (AY) 2011-12.
R P Foam Home (P) Ltd, the petitioner-assessee, had filed a petition challenging the reopening of its assessment for the AY 2011-12, based on a notice dated March 27, 2018, issued under Section 148 of the Act.
The petitioner argued that the reopening was unjustified, claiming that income for the relevant year had not escaped assessment. It asserted that the transactions under scrutiny had already been assessed in the previous year (AY 2010-11), where the advances for sales had been taxed. Additionally, the petitioner contended that all relevant financial records for FY 2009-10 and FY 2010-11 were duly submitted during the original proceedings.
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The court, however, noted that the reopening was not without basis. It observed that the reassessment was prompted by findings from a search operation involving a third-party entity, M/s Spaze Group. During investigations, it was discovered that M/s JMD International, which had financial dealings with the petitioner, was engaged in issuing accommodation entries and providing false billing.
Statements made during the inquiry revealed that payments to the petitioner by M/s JMD International were linked to unassessed income for AY 2011-12. The court found that not all receipts were taxed in the prior year as claimed by the petitioner.
Regarding the petitioner’s claim of a change in opinion, the court ruled that this argument was unfounded. It explained that since the original assessment was processed under Section 143(1) of the Act, which is a summary process, it did not involve full scrutiny.
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As a result, the reopening of the assessment under Section 148 was legally permissible. The court also referenced a prior ruling that clarified such reopening was valid in cases where only a summary assessment had been conducted.
The coram of Vibhu Bakhru(Justice) and Swarana Kanta Sharma(Justice) dismissed the petition, but emphasized that this ruling addressed only the legality of the notice, without any opinion on the merits of the reassessment itself.
To Read the full text of the Order CLICK HERE
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