Notice u/s 148 A can’t sustain if it was issued by Violation of Natural Justice Principle: Delhi HC [Read Order]

Delhi High Court - Notice - violation - natural justice principle - HC - taxscan

In a recent ruling, the Delhi High Court has held that notice u/s 148A can’t sustain if it was issued by violation of the natural justice principle and quashed the notice issued by the AO.

The petitioner challenged the notice dated 27th March 2022 under Section 148 of the Income Tax Act, 1961 for the Assessment Year 2018-19 under an order passed under Section 148A(d) of the Act. The Petitioner was asked to comply with the Show Cause Notice dated 21st March 2022 by 25th March 2022, thereby not giving him the minimum statutory prescribed time of seven days to reply to the notice.The petitioner contended that the notice under Section 148A(b) of the Act was issued by the Respondent stating that the Petitioner has claimed bogus Long Term Capital Gains (‘LTCG’) of Rs.1,23,21,875/- on purchase and sale in the shares of M/s Achal Investments Ltd and pointed that the next paragraph of the notice stated that the income chargeable to tax has escaped assessment for the Assessment Year 2015-16, making the notice self-contradictory. Further stated that the notice mentioned that the evidence about the said information had been enclosed but the same was not served upon the Petitioner.The respondent stated that there was a suppression of facts by the petitioner.

It was observed that the Petitioner has not been provided with an adequate opportunity to put forward its defence/reply as the annexure accompanying the notice enumerating the reasons for initiating reassessment pertained to the Assessment Year 2015-16 and not 2018-19. The Coram consists of Justice Manmohan & Justice Manmeet Pritam Singh Arora observedthat the allegation mentioned in the 148A(b) and demand notice whichwas to claim of bogus LTCG on purchase and sale of shares of Achal Investments ltd and viewed that the principles of natural justice have been violated. The court quashed the show cause notice issued under Section 148A(b) and the order dated 27th March 2022 was issued under Section 148A(d).Mr Amol Sinha appeared on behalf of the petitioner and Mr Shailendra Singh appeared on behalf of the respondent.

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