The Delhi High Court has quashed the reassessment notice issued with the approval of Joint Commissioner of Income Tax (JCIT).
The bench of Justice Vibhu Bakhru and Justice Tejas Karia has observed that the original assessment proceedings had culminated into the assessment order dated 30.12.2008 passed under Section 143(3) of the Income Tax Act. Therefore, in terms of the proviso (1) to Sub-section (1) of Section 151 of the Income Tax Act, no notice under Section 148 of the Act could be issued unless, the Commissioner of Income Tax [CIT] or the Chief Commissioner of Income Tax [CCIT] was satisfied on the reasons recorded by the AO that it was a fit case for issuance of such notice.
The Petitioner/Assessee had filed its return of income for AY 2006-07. The the Assessee filed its revised return for the AY 2006-07 on 21.09.2007.
The Assessee’s return was selected for scrutiny and a notice under Section 143(2) of the Income Tax Act was issued by the Assessing Officer. One of the issues examined during the assessment proceedings related to the capital gains disclosed by the Assessee from the sale of the agricultural land. The Assessee had disclosed that it had sold certain agricultural land belonging to him and his brother and had declared the consideration received for his fifty per cent share at Rs. 21,87,500. It was also submitted that a valuation report was furnished from a registered valuer in respect of the cost of the acquisition.
The AO examined the documents furnished by the Assessee and passed the assessment order dated 30.12.2008 under Section 143(3) of the Act accepting the Assessee’s returned income.
On 22.03.2013 the AO issued the notice under Section 148 of the Act seeking to reopen the assessment of the Assessee’s income for AY 2006-07 on the basis of certain incriminating information that was revealed during a search conducted under Section 132 of the Act, in respect of a ‘third party’. The notice was issued with the prior approval of the Joint Commissioner of Income Tax [JCIT] under Section 151 of the Act.
The Assessee filed his response to the notice under Section 148 of the Act and also furnished his computation of income. He requested that his return filed under Section 139 of the Act be treated as return filed pursuant to the notice under Section 148 of the Income Tax Act. The, the AO furnished the reasons for issuance of the notice under Section 148 of the Act and the Assessee filed his objection to the said reasons.
The Assessee appealed the said assessment order before the CIT(A) raising several grounds. The CIT(A) accepted the Assessee’s contention and deleted the additions made by the AO principally on the ground that the Assessee was not confronted with the material and evidence on the basis of which the additions were made. The CIT(A) also noted that no statement was recorded by the Directorate of Revenue Intelligence [DRI] to the effect that part consideration of the agricultural land had been paid in cash.
The issue raised was whether the initiation of the reassessment proceedings is invalid for want of necessary approval.
The court held that the notice under Section 148 of the Income Tax Act was invalid as issued contrary to the provisions of Section 151(1) of the Income Tax Act. Any proceedings continued pursuant to said notice including the assessment order passed under Section 147 of the Income Tax Act cannot be sustained.
Case Details
Case Title: Sukhbir S. Dagar Versus ITO
Case No.: ITA 741/2023 & CM APPL. 19588/2025
Date: 21.04.2025
Counsel For Appellant: Ved Jain
Counsel For Respondent: Sunil Kumar Agarwal
