Aastha Thakur
Published on: 15 October 2022 at 18:12 IST
Due to the department’s failure to pass the reassessment decision within the required time frame, the Delhi High Court has dismissed the show-cause notice and the reassessment order.
The department was unable to issue a second notice to the petitioner/assessee under Section 148A(b) dated June 2, 2022 after serving the first notice on March 31, 2021, under Section 148 of the unamended Act, according to the division bench of Justice Manmohan and Justice Manmeet Pritam Singh Arora.
The court stated that notifications under Section 148 issued between April 1 and June 30, 2021, were subject to the instructions granted by the Supreme Court in the matter of Ashish Agarwal. However, the circumstances of the current case did not support the decision.
In accordance with Section 148A(b) of the Income Tax Act, the petitioner received a letter dated June 2, 2022, stating that the petitioner is a beneficiary of accommodation entries given by the firms managed by Mr. Ashok Kumar Gupta. The petitioner was accused of recording Rs. 3,02,00,636 in false and fake sales in their books of accounts.
A response from the petitioner was submitted on June 4, 2022. The original notice under the unamended Section 148 of the Act was given to the petitioner on March 31, 2021, and served via email on the same day. The petitioner argued that the show causes notice of June 2, 2022, issued under Section 148A(b), was issued in mistake.
The petitioner argued that by completing its income tax return and responding to all notices sent under Section 142, it had properly engaged in the reassessment processes started by notice dated March 31, 2021, given under Section 148(1).
The petitioner claimed that the department had missed the deadline for passing the reassessment order, which was March 31, 2022. Despite the fact that the time for concluding the reassessment procedures under the notice issued under Section 148 had already passed, the respondent subsequently issued the show-cause notice dated June 2, 2022, according to Section 148A(b).
The show-cause notice dated June 2, 2022, as well as the order made under Section 148A(d) and the notice issued under Section 148, both dated July 28, 2022, were all overturned by the court for the Assessment Year 2017–18.
The court made it clear that it had not addressed the legitimacy and constitutionality of the proceedings started by the show cause notice given under Section 148 of the unamended Act on March 31, 2021.