In a recent ruling, the Delhi High Court held that the impugned action for income tax reassessment could be sustained.
In this case, the petitioner Satish Chand Jain had filed his Income Tax Return for the Assessment Year( AY) 2014-15 on 30.09.2014, declaring a total income of Rs. 2,29,80,740.
The Income Tax Act, 1961’s Section 143(3) was used to process the return. The ITR of the assessee was processed under Section 143(3) of the Income Tax Act,1961.
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Based on information from the Investigation Wing, Mumbai, the assessee was identified as a beneficiary of Rs. 3.07 crores through misuse of the NSEL Exchange platform by an unscrupulous broker during the AY 2014-15. Thus, the case was reopened under Section 147 of the Income Tax Act, with necessary approval, and a notice under Section 148 of the Income Tax Act was issued on 31.03.2021 for AY 2014-15, noting the income that had escaped assessment. The reassessment was concluded with a total assessed income of Rs. 5,43,20,297, including an additional taxable income of Rs 3,13,39,557.
The writ petitioner who was aggrieved by the reassessment order dated 30.03.2022, approached the Commissioner of Income Tax (Appeals) [CIT(A)].
Another Show Cause Notice (SCN) dated 02.06.2022 was issued proposing additions of income, stating the reason that the petitioner is the beneficiary of Rs. 3.07 crores through misusing the platform of NSEL by an unscrupulous broker. The petitioner in his reply stated that this notice is void ab initio as the previous notice dated 31.03.2021 was served on 01.04.2021 which was not challenged before any Court.
The final order was passed on 19.07.2022 under Section 148A(d) of the Income Tax Act without considering the objections raised by the petitioner.
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The counsel on behalf of the petitioner contended that figures for re-initiation of reassessment proceeding through the impugned notice dated 19.07.2022 is invalid and void ab initio and thus such a start to the reassessment process would be equivalent to double addition, which is not permissible under the law.
The High Court bench observed that “Undisputedly and as admitted, the assessment proceedings in this case were already concluded on 30.03.2022 and reassessment action was re-initiated on the same set of reasons vide SCN dated 02.06.2022 under Section 148-A(b) leading to passing of an order Section 148-A(d) and notice under Section 148 of the Act dated 19.07.2022.” The bench held that the respondents could not be justified in issuing notices seeking to reopen the proceeding afresh.
The bench held that the impugned action for reassessment cannot be sustained.
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The bench comprising of Justice Ravinder Dudeja and Justice Yashwant Varma allowed the writ petition and quashed the impugned order dated 19.07.2022 under Section 148-A(d) as well as consequential notice under Section 148 of the Income Tax Act, 1961.
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