Facts of the Case

The petitioner, Rishi Bansal, filed a writ petition challenging an order dated 31.08.2024 passed under Section 148A(d) of the Income-tax Act and the consequential notice dated 31.08.2024 issued under Section 148 for Assessment Year 2018-19.

The Assessing Officer issued a notice dated 17.08.2024 under Section 148A(b) alleging that information had been received from the Assessing Officer of M/s Bhagwati Developers indicating that the petitioner had purchased a residential flat bearing No. B-0902 in a project known as “Baybliss” for a total consideration of ₹70,35,940, whereas the agreement dated 25.07.2017 reflected a consideration of ₹45,00,000, and that “on-money” of ₹25,35,940 had been paid in cash.

The petitioner responded to the notice contending, inter alia, that the alleged escapement of income was below the threshold of ₹50,00,000 prescribed under Section 149(1)(b) and therefore reassessment beyond three years was barred by limitation.

However, in the impugned order under Section 148A(d), the Assessing Officer concluded that income of ₹95,71,880 had escaped assessment, alleging that the petitioner had received cash from M/s Bhagwati Developers and its group concerns during FY 2016-17.

Issues Involved

Whether the Assessing Officer could proceed with reassessment by changing the nature of allegations from payment of on-money to receipt of income, whether the computation of alleged escapement of income was based on any cogent material, and whether the order under Section 148A(d) suffered from non-application of mind.

Petitioner’s Arguments

The petitioner argued that the Assessing Officer had completely misconstrued the information available on record. It was submitted that the allegation in the notice under Section 148A(b) was limited to alleged payment of on-money of ₹25,35,940 and there was no allegation or material to suggest that the petitioner had received any amount from the developer. It was further argued that the Assessing Officer had erroneously added the total consideration and the alleged cash component, resulting in an arbitrary figure of ₹95,71,880 without any factual basis.

Respondent’s Arguments

The Revenue contended that the reassessment proceedings were initiated on the basis of information available on the Insight Portal and inputs received from another Assessing Officer, and that the Assessing Officer was justified in forming a prima facie view that income had escaped assessment.

Court Order / Findings

The Delhi High Court examined the impugned order and found that it was ex facie erroneous and passed without application of mind. The Court noted that the original allegation was that the petitioner had paid on-money while purchasing a flat, whereas the impugned order proceeded on an entirely different premise that the petitioner had received money from the developer, which was not supported by any material.

The Court observed that the information available with the Assessing Officer did not indicate that the petitioner had received any money from M/s Bhagwati Developers or its group concerns. The Court further noted that the Assessing Officer appeared to have erroneously added the total value of the transaction and the alleged cash component, despite the fact that the cash element was already part of the total consideration.

In view of these errors, the Court held that the impugned order could not be sustained and was liable to be set aside.

Important Clarification

The High Court clarified that any fresh order passed under Section 148A(d) must be strictly confined to the allegations contained in the notice issued under Section 148A(b) and any additional information, if relied upon, must be duly supplied to the assessee to enable an effective response. Reassessment proceedings cannot proceed on assumptions or by altering the factual foundation without material support.

Final Outcome

The writ petition was disposed of. The Delhi High Court set aside the order dated 31.08.2024 passed under Section 148A(d) and remanded the matter to the Assessing Officer for fresh consideration in accordance with law, after examining the information available on record and the petitioner’s reply. All rights and contentions of the parties were left open.

Link to download order - https://www.mytaxexpert.co.in/uploads/1769857086_RISHIBANSALVsINCOMETAXOFFICERWARD446NEWDELHI.pdf

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