Re-assessment Order Passed Without Considering Detailed Reply Of The Assessee: Delhi High Court
The Delhi High Court held that the significance of issuing a show cause notice prior to issuing a re-assessment notice has been lost because the order under Section 148A(d) of the Income Tax Act was made without taking into account the detailed reply filed by the assessee.The division bench of Justice Manmohan and Justice Manmeet Pritam Singh has observed that the department has not...
The Delhi High Court held that the significance of issuing a show cause notice prior to issuing a re-assessment notice has been lost because the order under Section 148A(d) of the Income Tax Act was made without taking into account the detailed reply filed by the assessee.
The division bench of Justice Manmohan and Justice Manmeet Pritam Singh has observed that the department has not examined the petitioner's plea that the petitioner-society has included all the transactions carried out by the Citizen Model School in its books of accounts.
The court set aside the order passed on the ground that 'the case of the petitioner-society was of non-filing of return' and the matter was remanded back to the Assessing Officer to pass a fresh order under Section 148A(d) within eight weeks.
The petitioner-society/assessee filed its return of income for the AY 2018-19 declaring 'Nil' income and in the column 'details of projects/institutions run by you'. The petitioner-society disclosed that it runs the Citizen Model School, having an aggregate annual receipt of Rs. 1,82,03,712 in the relevant assessment year.
The respondent/department issued a show cause notice to Citizen Model School seeking to reopen the assessment on the ground that it has entered into multiple transactions such as cash deposits, payments to contractors, etc. and has not filed any return of income.
The petitioner-society had filed a detailed reply to the show cause notice stating that no income had escaped assessment as all the cash deposits stated in the show cause notice had been accounted for by the petitioner-society in its return of income. The petitioner-society specifically clarified that the petitioner-society has accounted for all the financial transactions undertaken by the Citizen Model School while filing its return of income.
The petitioner contended that the respondents have sought to treat the Citizen Model School as an assessable person, which is not permissible as the school is run and managed by the petitioner-society and is thus a part of the petitioner-society itself.
The department contended that the petition is premature as, by way of the order, only a notice under Section 148 of the Income Tax Act has been issued.
The court noted that the new re-assessment scheme was introduced by the Finance Act, 2021 with the intent of reducing litigation and promoting the ease of doing business. The mandate of Section 148A(c) shall be taken to have been breached if the order under Section 148A(d) does not consider the reply filed by the assessee.
Case Title: Rithala Education Society Versus Union Of India
Citation: 2022 LiveLaw (Del) 816
Dated: 16.08.2022
Counsel For Petitioner: Advocate Kapil Goel
Counsel For Respondent: Advocate Bhagwan Swarup Shukla