The Delhi High Court recently allowed a Petition seeking to quash an impugned reassessment order issued by the Income Tax Officer, Ward-63(1), Delhi against the Financials of the Petitioner Proprietary firm M/s. JMK Enterprises.
The instant Writ Petition was filed against the Revenue alleging mishandling of the Petitioner’s Assessment for the Assessment Year 2014-15 by the Respondent Income Tax Officer.
JMK Enterprises, an entity dealing in electronic goods and components had filed its return of income for A.Y. 2014-15 on 29.11.2014, declaring a total income of Rs.23,05,560/- The furnished Income was refuted by the Income Tax Department which sought to conduct assessment of the Petitioner’s Income and served them with Notice under Section 148 of the Income Tax Act, 1961.
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In response, the Petitioner filed their return of income along with copies of Trade and P&L Account and balance sheets. Following perusal of the material adduced by the Petitioner, the Respondent passed an Assessment Order under Section 147 of the Income Tax Act, 1961 dated 26.03.2022 after accepting the submissions made by the Petitioner.
Subsequently, the Income Tax Department served the Petitioner with an order under Section 148-A(b) dated 31.05.2022 and Notice under Section 148 of the Income Tax Act, 1961 dated 20.07.2022 in light of the Supreme Court’s decision in Union of India v. Ashish Agarwal (2023).
The successive Order and Notice under Section 148-A(b) and Section 148 respectively of the Income Tax Act, 1961 have been challenged by the Petitioner via this Writ Petition contending that both the initial and subsequent Notices and Orders for A.Y. 2014-15 were formulated on identical grounds and cannot be upheld in law.
Counsels for the Revenue, Mr. Sanjay Kumar and Ms. Easha Kadian averred that the initial assessment proceedings and order dated 26.03.2022 in pursuance of Section 148 Notice dated 31.03.2021 are rendered void ab initio in light of the Apex Court’s ruling in Ashish Agarwal.
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The Judgment in Ashish Agarwal stipulated that all Orders passed under Section 148 between 01.04.2021 and 30.06.2022 shall be deemed to have been passed under Section 148-A(d) of the Income Tax Act,1961, subsequent to the Amendment of Section 148 by the Finance Act, 2021.
The Division Bench of the Delhi High Court comprising Justice Yashwant Varma and Justice Ravinder Dudeja assessed the right of the Respondent Department to reopen the concluded assessment on the basis of its own Decision in Anindita Sengupta vs. Assistant Commissioner of Income Tax, Circle 61 (1) New Delhi & Ors. (2024).
Laying importance to the precedential value of Anindita Sengupta, the Delhi HC held that in the instant case, prior assessment proceedings had concluded on 26.03.2022 while the reassessment was initiated via Show-cause Notice on 31.05.2022.
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Further, Order under Section 148-A(d) and Notice under Section 148 of the Income Tax Act, 1961 were both issued on 20.07.2022 which is much after the date of the Order of the initial assessment.
On the basis of the findings and evaluation of law, the Delhi HC allowed the Petition while quashing the impugned reassessment order under Section 148-A(d) and the consequential Notice under Section 148 of the Income Tax Act, 1961 citing its overlap with the prior Notice and Assessment Order.
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