GAUTAM WALIA vs. PRINCIPAL COMMISSIONER OF INCOME TAX, DELHI 12 & ANR.

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W.P.(C)/6310/2025HC DelhiDLHC01029192202513 May 2025Bench: HON'BLE MR. JUSTICE VIBHU BAKHRU,HON'BLE MR. JUSTICE TEJAS KARIA3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court found no merit in the petitioner's contention that the ACIT could not proceed with rectification after the CIT(A) had set aside the earlier order. The Court reasoned that the grounds for setting aside the earlier order (lack of notice) were addressed by the subsequent order, which was passed after affording the petitioner an opportunity to be heard. However, the Court found merit in the petitioner's second ground of challenge concerning the subsequent rectification order dated 18.05.2023, which had restored the returned income. The Court noted that the ACIT had not considered this aspect when passing the impugned order and that the CPC could not repeatedly rectify and re-rectify the intimation. The Revenue conceded that this fact was not brought to the ACIT's notice. Consequently, the Court set aside the impugned order dated 05.03.2025 and remanded the matter to the ACIT to consider it afresh, including examining whether the intimation could be re-rectified after it had already been rectified by the CPC.

What were the facts?

The petitioner, Gautam Walia, filed his return of income for AY 2019-20 on 26.10.2019, declaring an income of Rs. 28,63,160/- and claiming a refund. The return was processed under Section 143(1)(a), and an intimation dated 29.04.2020 was issued, granting a refund of Rs. 6,42,982/-. Subsequently, on 05.07.2021, the Assistant Director of Income Tax, CPC, rectified the intimation under Section 154, enhancing the income to Rs. 1,00,20,780/- by disallowing deductions under Section 36(1)(va) without providing a hearing. The petitioner appealed to the CIT(A), who set aside the rectification order on 30.07.2024 due to lack of notice. Thereafter, the ACIT issued a fresh notice and order under Section 154 on 07.10.2024 and 05.03.2025, respectively, again enhancing the income. The petitioner challenged these actions in the present writ petition.

What were the issues?

1. Whether the ACIT could proceed with rectification under Section 154 after the CIT(A) had set aside the earlier rectification order passed without notice. Assessee's contention: The petitioner argued that the CPC could not proceed with rectification after the CIT(A) had set aside the previous rectification order. The petitioner also contended that while its appeal before the CIT(A) was pending, it had filed a rectification application on 19.11.2022 before the CPC, which was allowed by an order dated 18.05.2023, restoring the returned income to Rs. 28,63,160/-. The petitioner argued that the CPC could not repeatedly rectify and re-rectify the intimation. Revenue's contention: The learned counsel for the Revenue submitted that the fact of the subsequent rectification application being allowed was not brought to the notice of the ACIT, and therefore, the matter ought to be remanded to the ACIT.

Which sections of the Income-tax Act were involved?

Section 154,Section 143(1)(a),Section 36(1)(va)

AI-generated summary — verify with the full judgment below

W.P.(C) 6310/2025 Page 1 of 3

$~69 * IN THE HIGH COURT OF DELHI AT NEW DELHI

Date of Decision : 13.05.2025

+ W.P.(C) 6310/2025, CM APPL. 28734/2025 & CM APPL. 28735/2025

GAUTAM WALIA

.....Petitioner Through: Mr. V. K. Sabharwal, Mr. R. B. Gupta and Mr. Rajiv Kumar, Advocates.

versus

PRINCIPAL COMMISSIONER OF INCOME TAX, DELHI 12 & ANR.

.....Respondent Through: Mr. Punit Rai and Mr. Yojit Pareek, Advocates. CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRU HON'BLE MR. JUSTICE TEJAS KARIA

VIBHU BAKHRU, J. (ORAL)

1.

The petitioner has filed the present petition impugning a notice dated 07.10.2024 [impugned notice] issued under Section 154 of the Income Tax Act, 1961 [the Act] as well as the order [impugned order] dated 05.03.2025, under Section 154 of the Act, passed pursuant to the impugned notice. 2. The petitioner had filed his return of income for the Assessment Year [AY] 2019-20 on 26.10.2019, declaring a total income of Rs. 28,63,160/-, and claiming a refund of Rs. 6,21,244/-. The said return was processed under Section 143(1)(a) of the Act. An intimation dated 29.04.2020 was issued alongwith the intimation of refund of Rs. 6,42,982/-, which was Signed By:AWANISH CHANDRA MISHRA Signing Date:19.05.2025 16:24:44 Signature Not Verified

W.P.(C) 6310/2025 Page 2 of 3

credited to the petitioner’s bank account. 3. Thereafter, on 05.07.2021 the Assistant Director of Income Tax, CPC, suo moto rectified the intimation under Section 154 of the Act and enhanced the chargeable income to Rs. 1,00,20,780/- by disallowing certain deductions claimed under Section 36(1)(va) of the Act, without affording the petitioner any opportunity of being heard. The petitioner challenged the said decision by filing an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] on 17.08.2021. 4. The CIT(A), by an appellate order dated 30.07.2024, allowed the appeal and set aside the rectification order dated 05.07.2021 on the ground that the said order was passed without issuance of any notice to the petitioner. However, thereafter, the Assistant Commissioner of Income Tax [ACIT] issued the impugned notice and passed the impugned order under Section 154 of the Act, once again enhancing the income declared by the Assessee to Rs. 1,00,20,780/- by rectifying the earlier intimation issued under Section 143(1)(a) of the Act. 5. It is the petitioner’s case that the Central Processing Centre [CPC] could not proceed with the rectification after the CIT(A) had set aside the said rectification order. 6. We find no merit in this contention. The petitioner’s challenge before the CIT(A) was on the ground that the rectification was carried out without issuance of any notice and without affording the petitioner any opportunity to be heard. The impugned order was passed after affording the petitioner an opportunity of being heard, and therefore, the grounds on which the earlier decision had been set aside, stood addressed. Signed By:AWANISH CHANDRA MISHRA Signing Date:19.05.2025 16:24:44 Signature Not Verified

W.P.(C) 6310/2025 Page 3 of 3

7.

However, we find that there is another ground of challenge, which merits consideration. It is the petitioner’s case that, while its appeal before the CIT(A) was pending, it had also filed a rectification application dated 19.11.2022 before the CPC against the intimation enhancing its income from Rs. 28,63,160/- to Rs. 1,00,20,775/-. The petitioner succeeded in this application, and by an order dated 18.05.2023, the Deputy Director of Income Tax, CPC, passed a rectification order, rectifying the intimation under Section 143(1)(a) by restoring the returned income to Rs. 28,63,160/-. 8. Clearly, the CPC cannot continue to rectify and re-rectify the intimation under Section 143(1)(a) repeatedly. This aspect has not been considered by the ACIT while passing the impugned order. 9. The learned counsel appearing for the Revenue submits that this fact was not brought to the notice of the ACIT and, therefore, the matter ought to be remanded to the ACIT. 10. In view of the above, we set aside the impugned order dated 05.03.2025 and remand the matter to the ACIT to consider the matter afresh. The ACIT shall also examine whether it can re-rectify the intimation after the same has already been rectified by the CPC. 11. The petition is disposed of in the aforesaid terms. 12. All the pending applications are also disposed of.

VIBHU BAKHRU, J

TEJAS KARIA, J MAY 13, 2025/KG

Click here to check corrigendum, if any Signed By:AWANISH CHANDRA MISHRA Signing Date:19.05.2025 16:24:44 Signature Not Verified

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