Facts of the Case

The petitioner, Monish Gajapati Raju Pusapati, filed a writ petition challenging the notice dated 23.03.2024 issued under Section 148 of the Income-tax Act, 1961 for Assessment Year 2020–21 and the order dated 03.02.2025 whereby the Assessing Officer rejected the petitioner’s objections to the assumption of jurisdiction.

The reassessment proceedings were initiated based on information reflected on the Insight Portal under the scheme notified under Section 135A of the Act, identifying the case as a high-risk case requiring reopening. The Insight Portal reflected that a cash deposit of ₹22,44,647 remained unverified for FY 2019–20, warranting further verification.

Approval under Section 151 of the Act was granted on 22.03.2024 by the Specified Authority for initiating reassessment proceedings, recording the same quantum of income allegedly escaping assessment. However, along with the notice under Section 148, the Assessing Officer inadvertently annexed information pertaining to another assessee having a different PAN.

Issues Involved

Whether reassessment proceedings initiated under Section 148 read with Section 135A were vitiated due to annexing information relating to another assessee, whether the Assessing Officer could bypass the procedure under Section 148A, and whether the order rejecting objections suffered from non-application of mind.

Petitioner’s Arguments

The petitioner contended that the reassessment notice was fundamentally flawed as it was based on information relating to another assessee, rendering the entire proceedings void. It was argued that failure to provide correct information violated principles of natural justice and the statutory scheme governing reassessment. Reliance was placed on the decision of the Bombay High Court in Benaifer Vispi Patel vs. Income Tax Officer.

Respondents’ Arguments

The Revenue submitted that reassessment was validly initiated under Explanation 1(iv) to Section 148 on the basis of information collected under Section 135A, and therefore the procedure under Section 148A was not required to be followed. It was argued that annexing information relating to another assessee was a bona fide and inadvertent error, which was curable and did not vitiate the notice itself. The Revenue further submitted that the correct information could be supplied to the petitioner, who would then be afforded an opportunity to respond.

Court Order / Findings

The Delhi High Court examined the Insight Portal records, the approval granted under Section 151, and the reasons forming the basis of reopening. The Court found that the information triggering reassessment proceedings consistently pertained to the petitioner and related to the alleged unverified cash deposit of ₹22,44,647 for AY 2020–21.

The Court held that the annexing of information relating to another assessee along with the notice under Section 148 was an inadvertent error and did not invalidate the notice itself. Invoking Section 292B of the Act, the Court held that such a defect was curable, as the notice was otherwise in substance and effect in conformity with the Act.

However, the Court found that the order dated 03.02.2025 rejecting the petitioner’s objections was unsustainable, as the authority failed to apply its mind to the objections and overlooked the apparent error on record. The Court held that while the notice could be sustained, the objections were not dealt with in accordance with law.

Important Clarification

The Court clarified that Section 292B saves reassessment notices from invalidity arising due to inadvertent defects or omissions, provided the proceedings are otherwise in conformity with the intent of the Act. However, this protection does not extend to orders rejecting objections without proper consideration, which must reflect due application of mind and adherence to principles of natural justice.

Final Outcome

The writ petition was partly allowed. The Delhi High Court quashed the order dated 03.02.2025 rejecting the petitioner’s objections, while sustaining the notice dated 23.03.2024 issued under Section 148. The Revenue was directed to supply the correct information and approval material to the petitioner within one week, grant opportunity to file objections, and thereafter proceed strictly in accordance with law. Pending applications were disposed of accordingly.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770016935_MONISHGAJAPATIRAJUPUSAPATIVsASSESSMENTUNITINCOMETAXDEPARTMENTANR..pdf

 

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