In an assessee-favouring ruling, the Delhi High Court has quashed a notice under section 148A of the Income Tax Act, 1961 by observing that the department failed to provide a minimum of seven days to respond to such notice and causing grave prejudice to the assessee.
The department passed an order under clause (d) of Section 148A rejecting the reply of the Petitioner on the ground that although the Petitioner had stated that the cash deposited in the bank account of the Petitioner was received from its members yet it had failed to provide the list of members who had given cash to the Petitioner.
The Petitioner, Shri Sai Co-Operative Thrift and Credit Society Ltd contended that the Petitioner was granted only three days’ time to file its response to the notice and the list of members could not be filed along with the reply as the time granted to the Petitioner to prepare the list and furnish along with its reply was inadequate. They further held that the revenue has failed to give a minimum time of seven days to the petitioner to file its reply and, thus,failed to fulfil the criterion of ‘not less than seven days” as provided in clause (b) of Section 148A of the Act.
Justice Manmohan and Justice Dinesh Kumar Sharma observed that under Section 148A(b) of the Act, a minimum time of seven days has to be granted to the assessee to file its reply to the said show cause notice.
Quashing the order, the Court held that “in the present case, though the petitioner responded to the show cause notice, yet it could not provide all the relevant details and documents, as the time period of three days to respond to the show cause notice was inadequate. Consequently, this Court is of the view that in the present case not only there has been a violation of the mandatory time period stipulated under Section 148A(b) of the Act, but grave prejudice has been caused to the petitioner.”Subscribe Taxscan Premium to view the Judgment