The Delhi High Court quashed the reassessment notice on grounds of breach of principles of natural justice.
The assessee, Synfonia Tradelinks Pvt. Ltd filed the income tax return for the assessment years along with the balance sheet. The returns for the Assessment Years were filed via electronic mode.
On the last date on which the limitation was to expire, a notice under Section 148 of the Act was issued by the respondent wherein respondent stated that he had reason to believe that income chargeable to tax qua Assessment Year 2011-2012 had escaped assessment within the meaning of Section 147 of the Act. Accordingly, the assessee was directed to file a return in the prescribed form for the said Assessment Year as respondent no.1 proposed to assess/re-assess the income/loss for the concerned Assessment Year.
Mr. Udaibir Singh Kochar, the counsel on behalf of the assessee urged that the approval for issuance of notice under Section 148 of the Act, and commencement of proceedings under Section 147 of the Act were sought by ACIT and not by respondent no.1. It is averred by the assessee that since the notice was issued after the expiry of four years from the end of the relevant assessment year under the provisions of Section 151 of the Act, the ACIT had no role to play in the process of grant of sanction.
Mr. Kochar argued that not only the information concerning the authorized capital, issued and subscribed paid-up capital and share premium account was wrongly recorded but also an error as gross as that which pertained to its year of commencement of business had crept in the order recording reasons.
The division bench of Justice Rajiv Shakdher and Talwant Singh noted that the order recording reasons neither discusses the contents of the report received from the investigation wing or the statements made by Mr. Pradeep Kumar Jindal and his associates. The order recording reasons, merely, indicates that the formation of belief is based on these sources.
“We are inclined to quash the impugned notice dated March 31, 2018, issued under Section 148 of the Act as well as the order granting sanction issued by the respondent authority,” the court said.
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