Facts of the Case

The petitioner, Daisy Distributors Pvt. Ltd., challenged the order dated 24.07.2022 passed under Section 148A(d) and the consequential notice dated 24.07.2022 issued under Section 148 of the Income-tax Act, 1961 for Assessment Year 2015–16.

The Assessing Officer issued a notice dated 20.05.2022 under Section 148A(b) stating that information was received through the Insight Portal from the Investigation Wing, Delhi, indicating that the petitioner was a beneficiary of accommodation entries provided by one Joginder Pal Gupta of the DAG Group. The information suggested receipt of ₹3,13,00,000/- during FY 2014–15 from several entities allegedly controlled by the said entry provider, categorised as fictitious loan transactions.

The petitioner filed a reply disputing the correctness of certain entries, contending that some transactions did not exist and that advances received had been repaid with no outstanding balance at the end of the year. The petitioner also raised a jurisdictional objection, asserting that since the information was derived from a search conducted on a third party, proceedings could only be initiated under Section 153C and not under Sections 147/148.

Issues Involved

Whether reassessment proceedings under Sections 147/148 read with Section 148A could be validly initiated on the basis of information obtained from a search conducted on a third party when the jurisdictional conditions for invoking Section 153C were not satisfied.

Petitioner’s Arguments

The petitioner confined its challenge to the jurisdiction of the Assessing Officer and argued that once information emanates from a search conducted under Section 132 on another person, the only permissible route for assessment is under Section 153C. It was contended that Section 153C overrides Sections 147/148 and therefore initiation of reassessment proceedings was without authority of law.

Respondent’s Arguments

The Revenue argued that no books of account or seized material belonging to the petitioner were handed over by the Assessing Officer of the searched person. Consequently, the jurisdictional condition for invoking Section 153C was not met. It was contended that in such circumstances, the Assessing Officer was entitled to initiate proceedings under Section 148A on the basis of information available on the Insight Portal suggesting escapement of income.

Court Order / Findings

The Delhi High Court held that it was undisputed that no books of account or seized material were handed over to the Assessing Officer of the petitioner by the Assessing Officer of the searched person. As a result, the essential jurisdictional condition for invoking Section 153C was not satisfied.

The Court held that in the absence of fulfilment of Section 153C requirements, the Assessing Officer was not precluded from initiating reassessment proceedings under Sections 147/148 read with Section 148A on the basis of information available through the Insight Portal.

The Court relied on the Supreme Court decision in Principal Commissioner of Income Tax v. Abhisar Buildwell (P.) Ltd. and its own decision in PCIT v. Naveen Kumar Gupta, holding that where Section 153C is not triggered, recourse to reassessment under Sections 147/148 is legally permissible even if the information has its genesis in a search conducted on another person.

Important Clarification

The Court clarified that Section 153C does not automatically bar reassessment under Sections 147/148 merely because information originates from a search on a third party. The bar applies only where the statutory threshold under Section 153C is met by handing over seized material belonging to the assessee.

Final Outcome

The writ petition was dismissed. The Delhi High Court upheld the validity of the order passed under Section 148A(d) and the notice issued under Section 148 for Assessment Year 2015–16, holding that reassessment proceedings were validly initiated in law.

 

Link to download the order - https://www.mytaxexpert.co.in/uploads/1769850493_DAISYDISTRIBUTORSPVT.LTD.VsTHEINCOMETAXOFFICERWARD71NEWDELHI.pdf

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