MINOSHA INDIA LIMITED FORMERLY RICOH INDIA LIMITED vs. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 16 1 & ANR.

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W.P.(C)/16388/2024HC DelhiDLHC01085765202427 November 2024Bench: HON'BLE MR. JUSTICE VIBHU BAKHRU,HON'BLE DR. JUSTICE SWARANA KANTA SHARMA3 pages
AI SummaryRemanded

What did the High Court hold?

The Delhi High Court set aside the impugned order dated August 31, 2024, passed under Section 148A(d) and the notice dated August 31, 2024, issued under Section 148 of the Income Tax Act, 1961, concerning Assessment Year 2018-19. The Court directed that the writ petition be treated as the assessee's response to the notice dated August 24, 2024, issued under Section 148A(b). The petitioner was granted liberty to file any additional response within one week. The Assessing Officer (AO) is to consider the contents of the petition and any additional response and pass appropriate orders in accordance with the law. The Court found merit in the petitioner's argument that the factual premise of the notice was erroneous and that the matter required fresh consideration by the AO, especially considering the Revenue's concession. The principle established is that where a reassessment proceeding is initiated based on a demonstrably incorrect factual premise, and the Revenue concedes to a remand for fresh consideration, the High Court may intervene to ensure due process and adherence to principles of natural justice.

What were the facts?

The petitioner, Minosha India Limited (formerly Ricoh India Limited), filed a writ petition challenging a show-cause notice dated August 24, 2024, issued under Section 148A(b) of the Income Tax Act, 1961, and a subsequent order dated August 31, 2024, under Section 148A(d), along with a notice under Section 148. The petitioner contended that the notice was based on a factually erroneous premise regarding the disallowance of income. The Assessing Officer (AO) alleged an escapement of income of ₹32,48,24,940/- due to a disallowance shortfall, whereas the petitioner claimed the actual disallowance was ₹32,97,88,740/-. This discrepancy, if correct, would confine the escaped income to ₹4,69,312/- related to club membership fees, which is below the threshold for reopening assessments under Section 149(1)(b) for Assessment Year 2018-19.

What were the issues?

1. Whether the impugned notice under Section 148A(b) and the order under Section 148A(d) are bad in law due to the petitioner not being provided an effective opportunity of being heard and the order being passed in haste, violating principles of natural justice? 2. Whether the impugned notice under Section 148A(b) and consequent notice under Section 148 are based on incorrect information suggesting escapement of income, specifically concerning the amount of disallowance? Assessee's Contentions: The petitioner argued that the AO's premise regarding the disallowance amount was factually incorrect. They asserted that the actual disallowance was ₹32,97,88,740/-, not ₹32,48,24,940/-. This correction would reduce the alleged escaped income to ₹4,69,312/-, which is below the threshold of ₹50,00,000/- stipulated in Section 149(1)(b) for reopening assessments for AY 2018-19. They also contended that principles of natural justice were violated. Revenue's Contentions: The Revenue's counsel acknowledged that the assessee's explanation was not before the AO as their request for an extension was rejected. However, the counsel agreed not to oppose remanding the matter to the AO for fresh consideration, given that the issue centered on a verifiable question of fact.

Which sections of the Income-tax Act were involved?

Section 148A(b),Section 148A(d),Section 148,Section 149(1)(b)

AI-generated summary — verify with the full judgment below

$~74 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 16388/2024, CM APPL. 69080/2024 (Stay) & CM APPL. 69081/2024 (Exemption)

MINOSHA INDIA LIMITED FORMERLY RICOH INDIA LIMITED

.....Petitioner Through: Mr. Ashish Mehta, Mr. Bharat Jain & Ms. Aanchal Jain, Advocates.

versus

DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 16 1 & ANR.

.....Respondents Through: Mr. Shlok Chandra, SSC with Ms. Naincy Jain & Ms. Madhavi Shukla, JSC.

CORAM:

HON'BLE MR. JUSTICE VIBHU BAKHRU

HON'BLE MS. JUSTICE SWARANA KANTA SHARMA

O R D E R %

27.11.2024 1. Issue notice. 2. The learned counsel appearing for the respondents accepts notice. 3. The petitioner has filed the present petition, inter-alia, praying as under: “a) Issue a writ of certiorari, or any other appropriate writ, order or direction quashing of the Impugned 148A(b) SCN dated 24 August 2024 (Annexure P1); and

b) Issue a writ of certiorari, or any other appropriate writ, order or direction quashing of the Impugned 148A(d) Order dated 31 August 2024 (Annexure P2) being bad in law since the Petitioner was not provided effective opportunity of being heard and the 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 02/12/2024 at 12:11:02

Impugned 148A(d) Order was passed in complete haste and disregard of principal of natural justice;

c) Issue a writ of certiorari, or any other appropriate writ, order or direction quashing of the Impugned 148A(b) Order dated 24 August 2024 (Annexure P1) and consequent Impugned 148 Notice dated 31 August 2024 (Annexure P3) being based on “incorrect information to suggest” escapement of income; and

d) Direct Respondent 1 to keep the re-assessment proceedings in abeyance and not to take any action in furtherance to the Impugned 148A(d) Order (Annexure P2) and Impugned 148 Notice dated 31 August 2024 (Annexure P3) during the pendency of the present Writ Petition.

e) Any other relief that this Hon’ble Court may deem fit and proper in the facts and circumstances of the present case.”

4.

It is the petitioner’s case that the impugned notice dated 24.08.2024 issued under Section 148A(b) of the Income Tax Act, 1961 (hereafter the Act) is founded on a factually erroneous premise, that an amount of ₹32,48,24,940/- was disallowed in computation of the income, instead of ₹32,97,88,740/-, resulting in a shortfall in disallowance of ₹49,63,800/-. Thus, according to the Assessing Officer (hereafter the AO), the said amount had escaped assessment. The assessee has explained that this is factually incorrect and in fact, an amount of ₹32,97,88,740/- was disallowed. Clearly, if this is correct, the transaction which is suggestive of the petitioner’s income escaping assessment is confined to ₹4,69,312/-, which relates to club membership fees paid by the assessee. This is below the threshold limit of ₹50,00,000/-, under Section 149(1)(b) of the Act and therefore, the assessments for assessment year (AY) 2018-19 could not be reopened.

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 02/12/2024 at 12:11:02

5.

Mr. Shlok Chandra, learned counsel appearing for the Revenue submits that the assessee’s explanation was not before the AO as his request for extending the time for filing the reply had been rejected. He, however, fairly states that considering that the issue is centered around the question of fact, that is easily verifiable from the record, he would not oppose remanding the matter to the AO, to consider it afresh. 6. In view of the above, we consider it apposite to set aside the impugned order dated 31.08.2024, issued under Section 148A(d) of the Act, as well as the notice dated 31.08.2024, issued under Section 148 of the Act, in respect of AY 2018-19. We direct that the present petition be considered by the AO as the assessee’s response to the notice dated 24.08.2024, issued under Section 148A(b) of the Act. 7. The petitioner is also granted liberty to file any additional response within a period of one week from date. The AO shall consider the contents of the present petition as well as any additional response that may be filed, and pass such orders, as it considers apposite, in accordance with law. 8. The petition is disposed of in the aforesaid terms. Pending applications also stand disposed of.

VIBHU BAKHRU, J

SWARANA KANTA SHARMA, J NOVEMBER 27, 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 02/12/2024 at 12:11:02

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