Delhi HC Quashes Reassessment Notice Issued on failure to follow Procedure as prescribed u/S 148A of Income Tax Act [Read Order]

The Delhi High Court quashed the reassessment notice issued on failure to follow the procedure as prescribed under section 148A of the Income Tax Act, 1961.

Chandra Prakash Srivastava , the petitioner has filed the present petition, inter alia, impugning an order dated 28.07.2022 [impugned order] passed under Section 148A(d) of the Income Tax Act, 1961 [the Act] along with the notice dated 28.07.2022 [impugned notice] issued under Section 148 of the Act and further proceedings in respect of assessment year [AY] 2015-16.

The petitioner is a company and had filed its return of income for the AY 2015-16 on 30.09.2015, declaring a loss of ₹7,28,478/-. The Assessing Officer [AO] issued a notice dated 28.06.2021 under Section 148 of the Act seeking to reopen the assessment for AY 2015-16. Although the said notice was issued after 31.03.2021, the procedure as prescribed under Section 148A of the Act was not followed, as the notice was premised on the provisions relating to reassessment as were in force prior to 31.03.2021.

Thereafter, by a communication dated 25.05.2022, the AO referred to the decision of the Supreme Court in Union of India & Ors. v. Ashish Agarwal: (2022) and forwarded certain information, which, according to the AO, suggested that the petitioner’s income had escaped assessment. It was viewed that the notice dated 28.06.2021 issued under Section 148 of the Act was deemed to be a notice under Section 148A(b) of the Act. The petitioner responded to the said notice on 06.06.2022.

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The AO passed an order dated 28.07.2022 under Section 148A(d) of the Act holding that it was a fit case for issuance of a notice under Section 148 of the Act in respect of AY 2015-16. The said order was forwarded to the petitioner along with a notice dated 28.07.2022 issued under Section 148 of the Act.

The petitioner contends that the proceedings initiated pursuant to the impugned notice dated 28.07.2022 are required to be set aside in view of the concession made by the Revenue before the Supreme Court in Union of India and Ors. v. Rajeev Bansal: 2024.

A division bench of Justice Vibhu Bakhru and Justice Tejas Karia set aside the impugned notice and the proceedings. As the revenue made a concession in the decisionthat described above is for the assessment year 2015-2016, all notices issued on or after 1st April, 2021 will have to be dropped as they would not fall for completion during the period prescribed under the taxation and other laws (Relaxation and Amendment of certain Provisions Act, 2020). Nothing further is required to be adjudicated in this matter as the notices so far as the present litigation is concerned is dated 25.6.2021.

The court quashed and set aside the impugned notice dated 28.07.2022 issued under Section 148 of the Act.

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