The Delhi High Court has dismissed an insurance broker’s challenge to reassessment proceedings, following an earlier ruling in the company’s own case that the genuineness of disputed transactions must be examined by the Assessing Officer.
The Bench of Justice Dinesh Mehta and Justice Aditi Choudhary has observed that a claim that brokerage receipts were already disclosed in the books and income tax return required factual verification where the department alleged that the transactions were spurious.
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The company had challenged an order dated June 30, 2026, passed under Section 148A(3) of the Income Tax Act, 1961, and a notice issued on the same date under Section 148 for Assessment Year 2020–21.
At the outset, the Income Tax Department submitted that the company had previously challenged a similar reassessment notice for Assessment Year 2019–20. That petition, W.P.(C) 14027/2025, had been dismissed by a coordinate bench on September 11, 2025.
The company accepted that the information and allegations underlying the proceedings for the two assessment years were almost identical. However, he argued that the earlier bench had not properly considered the order in T S G International Marketing Private Limited v. Income Tax Officer, Ward 25(3), Delhi.
The department countered that the July 14, 2025 order in that case was an interim order, whereas the September 11, 2025 judgment in the company’s own case was a final decision.
The High Court reproduced substantial portions of its earlier judgment to explain the background and reasoning governing the present petition.
According to the departmental material discussed in that earlier judgment, a search operation conducted on November 30, 2022, covered 37 Middle Layer Business Entities in the insurance sector. Another 32 insurance companies were covered during post-search verification.
The department alleged that these entities acted as intermediaries for routing additional insurance commissions beyond the limits prescribed by the Insurance Regulatory and Development Authority of India. The payments were allegedly described as expenditure on online media, advertising, marketing and brand promotion.
The investigation allegedly indicated that the intermediary entities lacked the capacity to provide the stated services and passed funds to insurance agents, intermediaries, master policyholders or their nominees.
In the proceedings for Assessment Year 2019–20, the department identified a transaction of ₹82,25,822 involving the company and IFFCO-TOKIO General Insurance Company Ltd. These figures form part of the earlier proceedings reproduced in the present judgment; the latest order does not separately specify the disputed transaction amount for Assessment Year 2020–21.
In its response concerning Assessment Year 2019–20, the company maintained that the disputed amount represented genuine brokerage income earned against insurance premiums placed on behalf of its clients.
It relied on an email confirmation from the insurer, invoices, insurer statements and a reconciliation of the amounts reflected in Form 26AS and the department’s Insight portal.
The company stated that it had recorded brokerage income of ₹83,28,333 in its audited financial statements, exceeding the ₹82,25,822 identified by the department. It asserted that the income had been included in its profit and loss account and that tax had already been paid.
It also denied any relationship with the intermediary groups mentioned in the investigation and denied receiving payments through them. The company maintained that more than 99% of its business involved group insurance rather than retail insurance.
The Assessing Officer, however, considered the explanation insufficient. As recorded in the earlier order, the officer questioned whether the documents established the genuineness of the transactions and noted the absence of a calculation showing the commission received as a percentage of premium receipts.
The High Court had held that the company’s assertion that the amount was already disclosed required examination of the underlying facts. The Assessing Officer needed to verify whether the receipt arose from a spurious transaction resulting in income escaping assessment.
The earlier bench therefore declined to undertake that factual inquiry in writ proceedings and dismissed the challenge.
The bench found that, apart from the assessment year, the facts were identical. It held that judicial discipline required it to follow the coordinate bench’s decision in the company’s own case.
The High Court dismissed the writ petition and disposed of the pending applications. The dismissal allows the reassessment proceedings to continue; it does not constitute a final finding that the disputed transactions were bogus or that additional tax is payable.
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