In a recent ruling the Delhi High Court restrains the Income Tax Department from taking further steps pursuant to the order passed under Section 148A (d) of the Income Tax Act, 1961.
The respondent was duly represented by Mr. Kumar, counsel, let a reply be filed within a period of six weeks from today. The petitioner shall have two weeks therefrom to file a rejoinder affidavit.
The bench of Justice Yashwant Varma and Justice Purushaindra Kumar Kaurav found to sustain the reassessment action bearing in mind the undisputed fact that the earlier search assessment came to be annulled with the Income Tax Appellate Tribunal resting its decision on the judgments rendered in Principal Commissioner of Income Tax vs Abhisar Buildwel wherein it has been held that If no incriminating material is discovered during a search, the Assessing Officer (AO) cannot reassess or adjust the completed or ongoing assessments based on other materials.
In essence, for completed or ongoing assessments, the AO cannot make any additions unless incriminating evidence is found during a search under Section 132 or a requisition under Section 132A of the Income Tax Act, 1961. However, the AO retains the authority to reopen these assessments under Sections 147/148 of the Act, provided the specific conditions outlined in these sections are met.
Further, the court restrained the respondents from taking further steps pursuant to the impugned order passed under Section 148A (d) of the Income Tax Act and notice under Section 148 of the Act, both dated 21 February 2024.
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