Facts of the Case

The petitioner challenged the order dated 31.03.2023 passed under Section 148A(d) of the Income Tax Act, 1961 along with the consequential notice issued under Section 148 for Assessment Year 2019–20.

The core grievance raised was that the mandatory notice under Section 148A(b) was not effectively served prior to passing the reassessment order. The petitioner contended that although the notice was dated 10.03.2023, it was received only on 31.03.2023, i.e., the same day the order under Section 148A(d) was passed.

Further, it was asserted that no real-time alert via email, as required under Rule 127 of the Income Tax Rules, 1962, was issued.

Issues Involved

  1. Whether reassessment proceedings are valid when notice under Section 148A(b) is not effectively served prior to passing the order under Section 148A(d).
  2. Whether failure to provide a reasonable opportunity of being heard vitiates the reassessment proceedings.
  3. Whether non-compliance with Rule 127 regarding service of notice invalidates the proceedings.

 

Petitioner’s Arguments

  • The petitioner argued that no proper notice under Section 148A(b) was served prior to the passing of the reassessment order.
  • The notice dated 10.03.2023 was received only on 31.03.2023, depriving the petitioner of an opportunity to respond.
  • There was no real-time email alert issued as mandated under Rule 127 of the Income Tax Rules.
  • Consequently, principles of natural justice were violated.

Respondent’s Arguments

  • The Revenue, through its counsel, suggested that the appropriate course would be to set aside the impugned order.
  • It was proposed that liberty be granted to the Assessing Officer to carry out the proceedings afresh (de novo) 

Court’s Findings / Order

  • The Delhi High Court set aside:
    • The order dated 31.03.2023 passed under Section 148A(d), and
    • The consequential notice issued under Section 148.
  • The Court allowed the petitioner to file a reply to the notice issued under Section 148A(b) within three weeks.
  • Directions issued:
    • The Assessing Officer shall grant a personal hearing.
    • A speaking order shall be passed in accordance with law after considering the petitioner’s response.
  • The writ petition was disposed of with these directions.

Important Clarification

  • Service of notice under Section 148A(b) must be effective and timely, ensuring a real opportunity to respond.
  • Mere issuance of notice without proper communication does not satisfy statutory requirements.
  • Compliance with Rule 127 (mode of service including electronic communication) is essential.
  • Violation of natural justice principles can render reassessment proceedings invalid.

Sections Involved

  • Section 148 – Income Escaping Assessment
  • Section 148A(b) – Opportunity of Being Heard before Reassessment
  • Section 148A(d) – Order for Reassessment
  • Rule 127 of Income Tax Rules, 1962 – Service of Notic

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/RAS02052023CW56502023_115813.pdf

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