In a recent case, the Delhi High Court, while allowing the writ petition, held that material considered in prior reassessment proceedings should not be the subject matter of reassessment in fresh proceedings.
Petitioner PMC Fincorp Ltd, formerly Priti Mercantile Company Ltd., filed its Return of Income (ROI) for the Assessment Year (AY) 2011-12 on 30.09.2011. The said ROI was processed under Section 143(1) of the Income Tax Act. Nearly four years later, a notice dated 17.09.2013 was issued to the petitioner under Section 148 of the Act.
In response to the notice, the petitioner filed a ROI, similar to the one filed on 30.09.2011. Upon receiving the reasons to believe recorded by the AO for triggering the reassessment proceedings, the petitioner filed its objections. After the disposal of the objection, the AO issued another notice dated 15.01.2015, alluding to a search on Mr. S.K.Jain, revealing the petitioner as a beneficiary of an accommodation entry from Transnational Growth Fund Ltd.
The petitioner responded to the notice dated 29.01.2015, stating it received Rs. 50 lakhs as a loan from TGFL in FY 2010-11, with proper banking channel transactions and TDS deduction. The respondent/revenue then passed an order on 22.11.2016 under Section 127 of the Income Tax Act.
Again, fresh reassessment proceedings were triggered, leading to a notice on 30.03.2018 under Section 148. The petitioner, aggrieved by the order, filed a writ petition before the court. Ved Jain, counsel for the petitioner, argued it’s a classic case of change of opinion, highlighting similarities between the 2013 and 2018 notices.
Abhishek Maratha, senior standing counsel, defended the respondent’s position, claiming the 2015 assessment order was silent on the 2013 notice query. The court observed that the 2018 proceedings were based on the same reasons and material, as recorded in the 2018 notice issued under Section 148 of the Act.
Therefore, as long as the assessment record shows a question was asked and answered, the AO doesn’t need to write a detailed order. After reviewing the facts, the division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia allowed the writ petition filed by the petitioner.
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