The High Court of Delhi has observed that the reassessment order cannot be passed without considering the reply of the assessee and held notice issued under section 148 of the Income Tax Act,1961 was not sustained.
The petitioner, Rithala Education Society filed its return of income declaring ‘Nil’ income and disclosed that the petitioner-society runs the Citizen Model School having an aggregate annual receipt of Rs.1,82,03,712/-.
The respondents issued a show cause notice dated 22nd March, 2022 under Section 148A(b) of the Act to Citizen Model School seeking to reopen the assessment of the school for the AY 2018-19 on the ground that it has entered into multiple transactions such as cash deposits, payments to contractors etc. and has not filed any return of income for the relevant assessment year.
It was contended by the petitioner that the respondents treated the Citizen Model School as an assessable person, which was not permissible as the school was run and managed by the petitioner society.
The Court observed that the respondent failed to issue a show cause notice at a stage before the issuance of a re-assessment notice under Section 148 of the Act. The impugned order stated that income had escaped assessment as no return of income had been filed by the school without dealing with the contention of the petitioner-society that all the financial transactions of the school had been accounted for in its return of income.
Justice Manmohan and Justice Manmeet Pritam Singh Arora set aside the impugned order as the respondents-revenue had not examined the petitioner’s plea that the petitioner-society has included all the transactions carried out by the Citizen Model School in its books of accounts.
Mr Kapil Goel appeared for the petitioner. Mr Bhagwan Swarup Shukla with Mr Gokul Sharma appeared for UOI and Mr Sanjay Kumar appeared for the Revenue with Ms Easha Kadian.
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