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

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W.P.(C)/15251/2024HC DelhiDLHC01075253202429 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, finding both contentions of the petitioner to be unmerited. Regarding the first issue, the Court held that the fact that the Assessing Officer (AO) received information in accordance with the risk management strategy formulated by the CBDT did not preclude the application of Explanation 2(iv) to the proviso to Section 148. The Court noted that a search was conducted on Galaxy Group of Companies, and information pertaining to the assessee was found, which does not exclude the possibility of the AO also obtaining information via the risk management strategy. Concerning the second issue, the Court found the contention that no approval was obtained under clause (c) of the proviso to Section 148A to be unmeritorious. The Court acknowledged that the AO had obtained the approval of the Principal Commissioner of Income Tax for the issuance of the impugned notice. It reasoned that the requirement of approval from the specified authority under Section 148 is similar to that in clause (c) of the proviso to Section 148A, and the argument for requiring two identical approvals was insubstantial. The petition was accordingly dismissed.

What were the facts?

The petitioner, Killa Financial Services Private Limited, challenged a notice dated March 19, 2024, issued by the Deputy Commissioner of Income-tax (Central Circle-25, Delhi) under Section 148 of the Income Tax Act, 1961, for Assessment Year 2021-22. The petitioner argued that the notice was based on information received under the CBDT's risk management strategy, making Explanation 1 to Section 148 applicable and precluding the use of clause (iv) of Explanation 2 to the proviso to Section 148. Additionally, the petitioner contended that no approval was obtained under clause (c) of the proviso to Section 148A, thus rendering Section 148A applicable. The revenue, represented by Mr. Siddhartha Sinha, Senior Standing Counsel, opposed these contentions.

What were the issues?

1. Whether the issuance of a notice under Section 148 of the Income Tax Act, 1961, based on information received in accordance with the CBDT's risk management strategy, precludes the Assessing Officer from invoking clause (iv) of Explanation 2 to the proviso to Section 148, given that these provisions are argued to be mutually exclusive. - Assessee's contention: The notice is based on information received via the risk management strategy, satisfying Explanation 1 to Section 148. Therefore, clause (iv) of Explanation 2 to the proviso to Section 148 cannot be invoked as they are mutually exclusive. - Revenue's contention: Not explicitly recorded, but implicitly argued that both can apply. 2. Whether the provisions of Section 148A of the Income Tax Act, 1961, are excluded if no approval was obtained under clause (c) of the proviso to Section 148A. - Assessee's contention: No approval was obtained under clause (c) of the proviso to Section 148A, meaning the provisions of Section 148A were not excluded. - Revenue's contention: Approval was obtained from the Principal Commissioner of Income Tax for the issuance of the notice, satisfying the requirement.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

$~55 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 15251/2024, CM APPL. 64036/2024 & CM APPL. 64037/2024

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) 2021-22. 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 11:31:38

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.

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 11:31:38

5.

Thus, the petition is unmerited and is accordingly dismissed.

VIBHU BAKHRU, J

SWARANA KANTA SHARMA, J OCTOBER 29, 2024/at

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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 11:31:38

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