In a significant case, the Delhi High Court quashed the order passed under Section 148(A)(d) of Income Tax Act and observed that the reassessment proceedings of the assessment year 2015-16 had already concluded.
The petitioner Akshita Jindal received an a notice under Section 148 of the Act on 31 March 2021 for the same AY 2015-16.In response to the said notice, the petitioner filed her Income Tax Return [“ITR”] on 14 January 2022 declaring a total income of ₹31,370/.
Accordingly On 31 March 2022, an assessment order under Section 147 read with Section 144A(b) of the Act was passed by the National Faceless Assessment Centre whereby, an addition of ₹6,54,78,799/- was made to the income of the petitioner on account of alleged accommodation entry through penny stock of one Achal Investment Ltd.
Aggrieved by the said assessment order, the petitioner preferred an appeal before the Commissioner of Income Tax (Appeals) [“CIT(A)”], NFAC, which is pending for disposal till date.
A show cause notice under Section 148A(b) of the Act was issued to the petitioner on 1 June 2022. The said notice was duly replied by the petitioner on 3 June 2022 and 11 June 2022, inter alia informing that the notice under Section 148 of the Act had already been issued earlier on 31 March 2021 and an assessment order thereto had already been passed by the respondents and thus, no fresh proceedings are justified.
However, on 16 July 2022, an order under Section 148A(d) of the Act came to be passed alleging an escapement of income of ₹65,47,78,967/- as against the alleged escaped amount of ₹6,54,78,799/-, which was originally reflected in the show cause notice.
Aggrieved by the order the petitioner filed the writ petition.
Dr. Rakesh Gupta, counsel appearing on behalf of the petitioner, submitted that the assessing officer has erroneously assumed jurisdiction under Section 147 of the Act and the impugned notices as the alleged escaped income had already been assessed to tax for the same AY vide assessment order dated 31 March 2022.
Shubhendu Bhattacharyya, counsel appearing on behalf of the respondents submitted that the notice dated 31 March 2021 under Section 148 of the Income Tax Act, came to be digitally signed and issued only on 1 April 2021 and therefore, in terms of the judgment rendered in Ashish Agarwal case it was deemed to be a show cause notice under Section 148(A)(b) of the Act.
While deciding the case the bench observed that notice issued under Section 148A(b) of the Income Tax Act fails to consider that the final order had already been passed in the reassessment proceedings by the petitioner on the same alleged escapement of income.
Further the respondents have proceeded to pass an order under Section 148(A)(d) of the Income Tax Act premised on an identical ground of escapement of income as alleged in the original notice for reassessment issued on 31 March 2021
After analyzing the facts and arguments of both parties, a division bench of Justice Purushaindra Kumar Kaurav and Justice Yashwant Varma observed that assessment under Section 147 of the Income Tax Act was already concluded, saying proceedings were completely ignored and no new material was unearthed. Therefore the Court quashed the order passed under Section 148(A)(d) of Income Tax Act .
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