Information Triggering Reassessment Proceedings Needs To Be Furnished To The Assessee: Delhi High Court

The Delhi High Court has held that the underlying information or material that formed the basis for triggering the assessment or reassessment proceedings was required to be furnished to the assessee.The division bench of Justice Rajiv Shakdher and Justice Tara Vitasta Ganju has noted that the petitioner has indicated that it will file a further response once the information or material is provided, and even if the information or material is not provided, it will reserve its right to file a further response.This writ petition was directed against the order passed under Section 148A(d) of the Income Tax Act, 1961, and the consequential notice of even date issued under Section 148.While conducting the assessment, the Assessing Officer (AO) came across certain unsecured loan transactions between three entities totaling Rs. 2.7 crore in total.The AO found that the lenders were either not found at the given address or exhibited typical characteristics of entry-provider entities. There were common directors, and at least two out of the three companies had their names struck off, presumably, from the register maintained by the Registrar of Companies (ROC).The department contended that the reply would show that it was a "partial" reply and that, taking into account the assertions raised, the AO via communication granted the petitioner further time to submit a final response. Therefore, the period of one month would commence only from June 30, 2022, which is the end of the month, i.e., the date on which the extended time to furnish the reply expired. Thus, if this position is taken to be correct, the AO could pass an order under Section 148A(d) on or before July 31, 2022.The court, while remitting the matter back to the AO, stated that the best way forward is to set aside the order dated July 25, 2022, passed under Section 148A(d) and the consequential notice issued under Section 148.Case Title: Charu Chains & Jewels (P) Ltd. Versus ACITCitation: 2023 LiveLaw (Del) 101Date: 22.12.2022Counsel For Petitioner: Advocates Rajat Navet, Ghanshyam Jha, Kushagra PanditCounsel For Respondent: Sr. Standing Counsel Sanjay Kumar, with Advocate EashaClick Here To Read The Order

Information Triggering Reassessment Proceedings Needs To Be Furnished To The Assessee: Delhi High Court

Mariya Paliwala

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