KILLA FINANCIAL SERVICES PRIVATE LIMITED vs. DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-25, DELHI & ORS.

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W.P.(C)/15222/2024HC DelhiDLHC01075211202429 October 2024Bench: HON'BLE MR. JUSTICE VIBHU BAKHRU,HON'BLE DR. JUSTICE SWARANA KANTA SHARMA3 pages
AI SummaryDismissed

What did the High Court hold?

The Delhi High Court dismissed the petition, holding that the contentions raised by the petitioner were unmerited. Firstly, the Court found that the fact that the AO received information in accordance with the risk management strategy did not preclude the applicability of Explanation 2(iv) to the proviso to Section 148. The Court noted that information pertaining to the assessee was found during a search on another group of companies, and this fact did not exclude the possibility of the AO also obtaining information via the risk management strategy. Secondly, the Court held that the contention regarding the lack of approval under Section 148A(c) was also unmerited. It was conceded that the AO had obtained the approval of the Principal Commissioner of Income Tax (PCIT) for issuing the notice. The Court observed that the requirement for approval from the specified authority under Section 148 is similar to that in Section 148A(c), and the argument for requiring two identical approvals was insubstantial. Therefore, the petition was dismissed.

What were the facts?

The petitioner, Killa Financial Services Private Limited, filed a writ petition challenging a notice dated March 19, 2024, issued by the Deputy Commissioner of Income-tax (Assessing Officer - AO) under Section 148 of the Income Tax Act, 1961, for Assessment Year 2022-23. The AO issued the notice based on information received in accordance with the risk management strategy formulated by the CBDT and also due to information pertaining to the assessee found during a search conducted under Section 132 of the Act on the Galaxy Group of Companies. The petitioner contended that the AO could not rely on Explanation 2(iv) to Section 148 as it was mutually exclusive with the risk management strategy information, and that no approval was obtained under Section 148A(c).

What were the issues?

1. Whether the AO, having received information in accordance with the CBDT's risk management strategy, could also take recourse to clause (iv) of Explanation 2 to the proviso to Section 148 of the Income Tax Act, 1961, given that these provisions are contended to be mutually exclusive? 2. Whether the provisions of Section 148A of the Income Tax Act, 1961, were not excluded due to the alleged lack of approval under clause (c) of the proviso to Section 148A? Assessee's Arguments: - The AO could not invoke Explanation 2(iv) to Section 148 as it is mutually exclusive with information received under the CBDT's risk management strategy. - No approval was obtained under Section 148A(c), thus the provisions of Section 148A were not excluded. Revenue's Arguments: - Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 132,Section 151

AI-generated summary — verify with the full judgment below

$~53 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 15222/2024, CM APPL. 63976/2024 & CM APPL. 63977/2024

KILLA FINANCIAL SERVICES PRIVATE LIMITED .....Petitioner

Through: Mr. Bhupinder Jit Kumar, Advocate.

versus

DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-25, DELHI & ORS.

.....Respondents Through: Mr. Siddhartha Sinha, Senior Standing Counsel for Revenue.

CORAM:

HON'BLE MR. JUSTICE VIBHU BAKHRU

HON'BLE MS. JUSTICE SWARANA KANTA SHARMA

O R D E R %

29.10.2024 1. The petitioner has filed the present petition, impugning a notice dated 19.03.2024, issued by the Assessing Officer (hereafter the AO), under Section 148 of the Income Tax Act, 1961 (hereafter the Act), for the assessment year (AY) 2022-23. 2. The learned counsel appearing for the petitioner has assailed the impugned notice essentially on two grounds. First, he submits that the annexure to the impugned notice indicates that the AO has issued the said notice, based on the information received in accordance with risk management strategy formulated by the Central Board of Direct Taxes (hereafter the CBDT), and therefore, the condition as stipulated in This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 11/11/2024 at 11:33:33

Explanation 1 to Section 148 of the Act is satisfied. He submits that in view of the aforesaid, the AO could not take recourse to clause (iv) of Explanation 2 to the proviso to Section 148 of the Act, as the same are mutually exclusive. Second, he submits that no approval was obtained under clause (c) of proviso to Section 148A of the Act and therefore the provisions of Section 148A of the Act were not excluded. 3. None of the aforesaid contentions are merited. The fact that the AO had received information, in accordance with the risk management strategy formulated by the CBDT, did not oust the provisions of Explanation 2(iv) to the proviso to Section 148 of the Act. In the present case, a search was conducted on Galaxy Group of Companies, under Section 132 of the Act. It is the AO‟s case that during course of the search, certain books of accounts and other documents were found which contained information pertaining to the assessee. The said fact does not exclude the possibility of the AO also obtaining information in accordance with the risk management strategy. 4. The second contention that the approval under clause (c) of proviso to Section 148A of the Act has not been obtained and therefore, the provisions of Section 148A of the Act are not excluded, is also unmerited. Concededly, the AO had obtained the approval of the concerned Principal Commissioner of Income Tax (hereafter the PCIT) for issuance of the impugned notice. The requirement of approval from the specified authority (as referred to in Section 151 of the Act) under Section 148 of the Act is in similar terms as contained in clause (c) of proviso to Section 148A of the Act. The contention that the AO is required to secure two identical approvals, is clearly insubstantial. 5. Thus, the petition is unmerited and is accordingly dismissed. Pending This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 11/11/2024 at 11:33:34

applications are also disposed of.

VIBHU BAKHRU, J

SWARANA KANTA SHARMA, J OCTOBER 29, 2024/at

Click here to check corrigendum, if any This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 11/11/2024 at 11:33:34

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