Reassessment Based on Insight Portal Information must be u/s 147/148, Not Section 153C: Delhi HC [Read Order]

In a recent ruling, the Delhi High Court ruled that reassessment was initiated based on insight portal information so it must be under Section 147 or 148  of the Income Tax Act, 1961 not under Section 153C.

Daisy Distributors Pvt. Ltd. the petitioner challenged the validity of an order dated 24.07.2022 issued under Section 148A(d) of the Income Tax Act, 1961, and a notice under Section 148 for the assessment year 2015-16.

The case involved allegations that the petitioner had received accommodation entries worth Rs. 3.13 crore from entities managed by Joginder Pal Gupta (DAG Group), found during a search operation in December 2019.

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The Assessing Officer (AO) issued a notice under Section 148(A)(b) on 20.05.2022 based on information from the Income Tax Department's insight portal alleging fictitious loan transactions with multiple entities.

The petitioner challenged the notice arguing that the transactions were incorrect and that he received advances and repaid them leaving no outstanding credit for the financial year 2014-15.

The petitioner’s counsel argued that the AO lacked jurisdiction to initiate proceedings under Section 147/148 as the information derived from the search should have been assessed under Section 153C of the Income Tax Act.

The petitioner’s counsel submitted evidence including ledger accounts and claimed that the proceedings were invalid because the AO had not been handed any material by the AO who searched (Joginder Pal Gupta).

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The respondent counsel countered that Section 148A proceedings were valid since the conditions for invoking Section 153C were not met as no relevant material was transferred by the AO of the searched party.

During arguments, the bench comprising Justice Vibhu Bakhru and Justice Swarana Kanta Sharma observed that the jurisdictional threshold for Section 153C was not satisfied because the AO who searched the premises never handed over any books/material to the AO in the present case and thus the AO was not precluded from initiating reassessment under Section 148A of the Income Tax Act, 1961.

The court referenced the Supreme Court’s ruling in the case of Principal Commissioner of Income Tax v. Abhisar Buildwell (P.) Ltd., which held that reassessment under Section 147/148 is valid if Section 153C of the Income Tax Act, 1961 is not applicable.

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The court dismissed the petitioner’s argument and upheld the validity of the reassessment proceedings under Section 148A of the Income Tax Act, 1961 for the assessment year 2015-16.

To Read the full text of the Order CLICK HERE

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