Rajnish Puri vs. Assistant Commissioner Of Income Tax - (High Court of Delhi) (05 Aug 2022)

Allegation in the notice issued under Section 148A(b) of the IT Act has to be precise not vague

MANU/DE/2796/2022

Direct Taxation

Present writ petition has been filed challenging the order passed under Section 148A(d) of the Income Tax Act, 1961 and the consequential notice issued under Section 148 of the IT Act for the Assessment Year 2014-15.

In the present matter, the assessment of the Assessee was reopened on the basis of information uploaded on INSIGHT portal stating that search under Section 132 of the Act had been conducted on 11th September, 2018 in the case of Jignesh Shah and Sanjay Shah of Ahmedabad and the search had resulted in seizure of unaccounted cash of Rs.19.37 crores (relating to accommodation entries and commission earned thereon), along with incriminating digital as well as documentary evidences. As per the impugned Order, the Assessee, was found to be a beneficiary of accommodation entry of fictitious loan of Rs.63,06,250 during Financial Year 2013-14.

Learned counsel for the Petitioner contends that, the information on which the reassessment proceeding had been initiated was incorrect and the assumption of jurisdiction was completely flawed.

Both in the notice issued under Section 148A(b) of the IT Act as well as in the Dissemination of Information note supplied to the Petitioner, the allegation is of a 'fictitious loan' and not 'fictitious long term capital gain' of Rs.63,06,250.

This Court is of the view that, the allegation in the notice issued under Section 148A(b) of the IT Act has to be precise, so that the assessee has a fair and reasonable opportunity to put forward its defence. In the event, the allegation in the notice under Section 148A(b) of the IT Act is incorrect or vague, the Assessee would be deprived of an opportunity of putting forward its defence and Section 148A(b) would be rendered nugatory.

The impugned order passed under Section 148A(d) of the IT Act and the notice issued under Section 148 of the Act are set aside and the Petitioner-Asseessee is given an opportunity to file a response to the notice under Section 148A(b) of IT Act. The Assessing Officer is directed to pass a fresh order under Section 148A(d) of the IT Act within four weeks thereafter. Petition disposed off.

Tags : ASSESSMENT NOTICE LEGALITY