The Delhi High Court quashed an income tax reassessment notice of Panch Tatva Promoters Pvt. Ltd. for the Assessment Year 2019–20 under Section 153C of the Income Tax Act, 1961. The court held that the notice was legally untenable as it had no relevant material for the prescribed assessment period.
Case Summary: Income Tax Reassessment Being Challenged
The reassessment process had been triggered by the tax department as of August 28, 2024, based on the satisfaction note prepared by the Assessing Officer (AO) regarding a search operation performed on February 3, 2021. The search operation resulted in the seizure of a pen drive allegedly containing incriminating material pertaining to an amount of ₹70.78 lakh concerning High Ground Enterprises Ltd. (HGEL) and Panch Tatva Promoters Pvt. Ltd. This transaction had allegedly been backed by a suspicious invoice
Nonetheless, the transaction was for Financial Year 2014–15, whereas the notice was pertaining to AY 2019–20 representing a clear mismatch.
Delhi HC’s Judgement Regarding Section 153C
A division bench of Justices Vibhu Bakhru and Tejas Karia noted that to effect a valid reassessment under Section 153C, the seized material must directly pertain to the particular year to be reassessed and observed that it was evident from the satisfaction note in the present case that there was nothing of substance to indicate any income had escaped assessment for AY 2019–20.
The bench referred to previous judgments including, the Supreme Court ruling in the Sinhgad Technical Education Society case and the judgement of the Delhi high court of Saksham Commodities Ltd. v. ITO and referred as a repeat that reassessment requires some clear and relevant material evidence.
Case Title: Panch Tatva Promotors Private Limited V/S Assistant Commissioner Of Income Tax Circle 25 Delhi And Ors
Citation: W.P.(C) 17374/2024 and CM APPL. 73972/2024
Read More: GST Refund Rules Receive Facelift: New CBIC Amendments to Take Effect from May 2025
