The Delhi High Court quashed the income tax notice as there was no approval of specified authority under Section 151(ii) of the Income Tax Act, 1961.
The present petition, filed at the instance of the assessee, seeks quashing of the notices, issued under Section 148A(b) and Section 148, respectively and the consequential order passed under Section 148A(d) of the Income Tax Act or the Assessment Year [“AY”] 2017-18.
The petitioner is stated to have been deriving income from the business of wholesale trading of pan masala and beetle nut (supari) through his proprietorship concerns namely, M/s Neelkanth Trades and M/s Prem Supari Bhandar. On 28 March 2017, he was served with a summon under Section 131(1A) of the Income Tax Act, seeking verification of cash deposits made by him in his bank account during the period of demonetization i.e., 08 November 2016 to 31 December 2016 [“demonetization period”].
The petitioner claimed that the said cash deposit in his bank account represents the sale proceeds of the business. While issuing notice under Section 133(6) of the Income Tax Act, the Revenue sought confirmation from M/s Mahalaxmi Devi Flavours Pvt. Ltd., from whom the petitioner claimed to have made the purchases. Consequently, on 28 December 2019, an assessment order under Section 143(3) of the Income Tax Act came to be passed accepting the aforesaid ITR.
The Revenue issued the impugned notice, under Section 148A(b) of the Income Tax Act and initiated reassessment proceedings by supplying the petitoner with the information in its possession i.e., an exponential increase in the sales turnover of the petitioner during AY 2017-18, alleging that the same has escaped assessment. Consequently, the impugned order under Section 148A(d) of the Income Tax Act was passed by the Revenue.
The counsel for the petitioner argued that the reassessment proceedings for AY 2017-18 lack requisite jurisdiction and are entirely unlawful and that the initiation of these proceedings stems solely from a change of opinion without providing any new substantial evidence which would warrant such action by the Revenue.
A Division Bench of Justices Purushaindra Kumar Yadav and Yashwant Varma relied on the judgment in Twylight Infrastructure Pvt. Ltd. v. ITO & Ors. wherein it was held that “. Therefore, having regard to the aforesaid, the impugned notices and orders in each of the above-captioned writ petitions are quashed on the ground that there is no approval of the specified authority, as indicated in Section 151(ii) of the Act. The direction is issued with the caveat that the revenue will have liberty to take steps, if deemed necessary, albeit as per law.”
“Accordingly, for the reasons assigned in the aforenoted judgment, we allow the instant writ petition and quash the impugned notices dated 26 May 2022 and 30 July 2022 and the impugned order dated 30 July 2022, subject to liberty reserved as per paragraph Nos. 28 to 30 of Twylight Infrastructure” the Bench noted.
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