The Delhi High Court has recently quashed a re-assessment notice as there was no rational nexus or reason to believe for the escapement of income under the provisions of the Income Tax Act, 1961.
The petitioner, KURZ INDIA Private Limited challenged the re-assessment notice before the High Court stating that reopening of assessment was done on the sole ground that the petitioner has made a claim of deduction of Rs.1,54,05,798/-; when, in fact, no such claim has ever been made.
Before the High Court, the department submitted that the Assessing Officer wished to ascertain as to how the contingent liability on account of statutory forms – Central Sales Tax had increased from Rs.1,17,51,217/- in the last financial year to Rs.1,51,05,798/- in the current financial year.
A bench comprising Justices Manmohan and Sudhir Kumar held that “Consequently, this Court is also of the view that the reason to believe is invalid and has no rational nexus to the belief for escapement of income and there was no fresh material on record to initiate reassessment proceedings.”
“This Court is further of the view that no useful purpose would be served by giving an opportunity to file a counter-affidavit. Accordingly, the said request of learned counsel for the respondent is declined and the impugned notice dated 28th March 2021 and the order disposing of objections dated 27th December 2021 are quashed,” the Court said.
However, in the event the Assessing Officer has some fresh material, he shall be at liberty to take action in accordance with the law. In the event such an action is taken, the petitioner shall be at liberty to file appropriate proceedings in accordance with the law. Accordingly, the writ petition and application stand disposed of.
KURZ INDIA PRIVATE LIMITED vs PRINCIPAL COMMISSIONER OF INCOME TAX -5, NEW DELHI & ORS.
CITATION: 2022 TAXSCAN (HC) 125
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