Income Tax Reassessment Order Passed without Considering Assessee’s plea: Delhi HC Directs to approach CIT(A) [Read Order]

In a recent case, the Delhi High Court Income Tax Reassessment Order passed without considering the Assessee’s plea: Delhi HC Directs to approach CIT(A). The assessee has a remedy against the order before CIT (Appeals), which is a more efficacious remedy.

Meena Chawla, the petitioner filed an income tax return for the Assessment Year (AY) 2016-17. On 01.04.2021 a notice dated 31.03.2021 was issued by the Respondent No.1 under Section 148 of the Income Tax Act, 1961 (the Act) in the name of the petitioner stating that the respondents had reasons to believe that the income of the petitioner chargeable for taxation purposes for the AY 2016-17 had escaped assessment within the meaning of Section 147 of the Act.

Additionally, in the year 2021-22, notices were issued to the petitioner to furnish certain information electronically pertaining to the AY 2016-17. The petitioner furnished a reply to the same stating that no income has escaped assessment and as such the procedures may kindly be withdrawn.

A writ petition was filed by the petitioner against the notices issued under Section 148 of the Act dated 31.03.2021, on 01.04.2021. The said writ petition was decided along with batch matters with the lead matter being Kanwaljeet Kaur v. Assistant Commissioner of Income Tax Circle (34) 1 Delhi & Ors. WP(C) 3908/2023, wherein this Court held that “the concerned AOs shall consequently pass a reasoned and speaking order dealing with the impact of the judgments referred to above upon the impugned reassessment notices and in the manner indicated in paras 27 and 28 of this order.

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That decision shall thus render a finding on whether the impugned reassessment notices would survive or be liable to be recalled. It shall be open to the writ petitioners to assail any adverse orders that may come to be passed pursuant to the above in accordance with law.”

Pursuant to the orders of the Court whereby the matter was remanded back to the Assessing Officer (AO), the AO has passed the impugned order dated 07.05.2025. It may be stated here that on 29.05.2023, the AO during the pendency of the above writ petition has passed the assessment order. The AO in his latest order passed pursuant to the directions given by this Court has re-computed the income of the petitioner and reiterated the assessment order dated 29.05.2023.

The petitioner contended that while passing the impugned order dated 07.05.2025, the AO has not considered any of the pleas urged by the petitioner and hence, the assessment order dated 29.05.2023 which has been upheld by the AO in his impugned order dated 07.05.2025 needs to be set aside.

The court observed that the AO was to render his finding as to whether the impugned re-assessment notices would survive and it shall be open to the writ petitioners to assail any adverse order that may be passed in accordance with law.

The petitioner stated that various additional contentions in support of the challenge to the order were raised by the petitioner herein but the AO has only dealt with the issue of surviving period and not considered the additional contentions, which is unfair. Suffice to state this Court had made it clear that Court had only heard the parties in respect of issues that the Court had framed in its order dated 05.08.2025.

Though the Court had confined it adjudication to the issues as flagged in the order dated 05.08.2024, the Court in paragraph 32 has reserved the right of the writ petitioners including the petitioner herein to raise additional contentions if need so arise, independently in accordance with law and subject to the outcome of exercise which the AO is liable to undertake in terms of the directions.

The above would reveal that it was obligatory on the part of the AO to decide the issue by passing a speaking order dealing with impact of the judgments in Rajiv Bansal and Ram Balram on the impugned re-assessment notices and to give a finding whether impugned notices would survive or be liable to be recalled.

Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here

It is a fact that the AO in the impugned order dated 07.05.2025 has upheld the income assessed under Section 147 of the Act in the order dated 29.05.2023 (AY), The counsel for the petitioner does concede that the order dated 07.05.2025 is a speaking order dealing with impact of the above judgments on the re-assessment notice.

The submission of the counsel for the petitioner is that the other contentions which were part of the submissions have not been dealt with by the AO in the order dated 07.05.2025. It is undisputed the petitioner has a remedy against the order dated 29.05.2023 before CIT (Appeals). The petitioner is not precluded from raising all pleas before the appellate authority, that is CIT (Appeals), which is a more efficacious remedy.

The court relied on the judgement of the Supreme Court in the case of Commissioner of Income Tax v. Chhabil Dass Agarwal, Civil Appeal No. 6704 of 2013. In the said judgement the apex court observed that the Act provides complete machinery for the assessment/re-assessment of tax, imposition of penalty and for obtaining relief in respect of any improper orders passed by the Revenue Authorities, and the assessee could not be permitted to abandon that machinery and to invoke the jurisdiction of the High Court under Article 226 of the Constitution when he had adequate remedy open to him by an appeal to the Commissioner of Income Tax (Appeals).

And held that “the Writ Court ought not to have entertained the Writ Petition filed by the assessee, wherein he has only questioned the correctness or otherwise of the notices issued under Section 148 of the Act, the re-assessment orders passed and the consequential demand notices issued thereon.”

Relying on the judgement , the division bench of Justice V. Kameswar Rao and Justice Vinod Kumar granted the liberty to the petitioner to seek such remedy as available in law and dismissed the petition.

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