Section 148A(c) casts Duty on AO, to consider Reply of Assessee in response to Notice before making an order u/s 148A(d) of Act: Delhi HC [Read Order]

The Delhi High Court consisting of Justice Manmohan and Justice Manmeet Pritam Singh Arora held that Section 148A(c) casts duty on AO, by using the expression ‘shall’ to consider the reply of the petitioner/assessee in response to the notice under Section 148A(b) before making an order under Section 148A(d) of the Act.

The writ petition has been filed by the petitioner, Aten Capital Private Limited challenging the order passed under Section 148A(d) and the notice issued under Section 148 of the Income Tax Act, 1961. The Counsel for the petitioner, Amit Dayal submitted that the impugned order has been passed in complete violation of the principles of natural justice as well as the statutory mandate incorporated in Section 148A(c) and (d) inasmuch as the reply furnished by the petitioner was not taken into consideration and an adverse inference was wrongly drawn against the petitioner and further submits that Section 148A advisedly uses the expression ‘enquiry’. Consequently, according to him, it is open to the Assessing Officer to issue a notice for the purpose for verification of transaction to examine as to whether income has escaped assessment.

The Court observed that “even if the re-assessment was being done for verification in accordance with Explanation 1 to Section 148, nothing prevented the Assessing Officer from conducting an enquiry with respect to the said information in accordance with Section 148A(a) of the Act. In any event, it was all the more necessary in the present case for the Assessing Officer to thoroughly scrutinise the contentions and submissions advanced by the petitioner-assessee before passing an order under Section 148A(d) of the Act and the mandate of Section 148A(c) has been violated as it casts a duty on the Assessing Officer, by using the expression ‘shall’ to consider the reply of the petitioner/assessee in response to the notice under Section 148A(b) before making an order under Section 148A(d) of the Act.”

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