Court Nullifies Reassessment Proceedings for Falling Short of Threshold Requirement

Facts:

The case revolves around the reassessment proceedings for Assessment Year 2017-18. The petitioner's counsel argued that the proceedings were flawed due to lack of approval and the escaped income being below the threshold requirement.

Rationale:

The court found merit in the petitioner's arguments. The department had not filed a counter-affidavit to resist the petition, leading the court to accept the petitioner's assertions.

Judgement:

The court quashed the reassessment proceedings, including the notice issued under Section 148A(b) (of Income Tax Act, 1961) and the order passed under Section 148A(d) (of Income Tax Act, 1961).

Important Questions Handled:

The case dealt with the validity of reassessment proceedings and the threshold requirement under Section 149(1)(b) (of Income Tax Act, 1961).

Court Name : Delhi High Court Parties :Deepak Jain Vs ITO (Delhi High Court) Decision Date : 12 May 2023 Judgement ref : W.P.(C) 5654-2023

1. On 02.05.2023, we had heard the matter briefly, when we had recorded the following broad contour, concerning the matter at hand:

“2. This writ petition concerns Assessment Year (AY) 2017-18. 3. Mr Nitin Gulati, who appears on behalf of the petitioner, says that the reassessment proceedings are flawed for the following reasons:

(i) First, the proceedings do not have the approval of the specified authority.

(ii) Second, even according to the respondents/revenue, the escaped income is Rs.30,70,526/-. This is below Rs.50,00,000/-, which is the threshold requirement provided under Section 149(1)(b) (of Income Tax Act, 1961) [in short, “Act”].”

2. Mr Aseem Chawla, learned senior standing counsel, who appears on behalf of the respondents/revenue, cannot but accept that the escaped income, as noted by us on 02.05.2023, is below Rs.50 lakhs.

3. It is also obvious that more than three years have elapsed, since the end of the Assessment Year (AY) in issue.

4. We had indicated on 02.05.2023 that if the department were to give instructions to resist the petition, a counter-affidavit should be filed. No counter-affidavit has been filed.

5. Therefore, we will have to accept, for the moment, that the assertions made in the writ petition on facts are correct.

6. Mr Chawla cannot but accept that if the facts as set out in the petition are correct, then the reassessment proceedings cannot progress further.

7. Accordingly, prayer made in the petition is allowed.

8. Consequently, the impugned notice dated 21.05.2022 issued under Section 148A(b) (of Income Tax Act, 1961) and the order dated 28.07.2022 passed under Section 148A(d) (of Income Tax Act, 1961) [in short, “Act”] are quashed.

8.1 The consequential notice of even date i.e., 28.07.2022, issued under Section 148 (of Income Tax Act, 1961) is also quashed.

9. Interim order dated 02.05.2023 shall also stand vacated. Interlocutory application stands closed.

10. The writ petition is disposed of, in the aforesaid terms.

RAJIV SHAKDHER, J

GIRISH KATHPALIA, J

MAY 12, 2023