MODI INDUSTRIES LIMITED vs. DEPUTY COMMISSIONER OF INCOME TAX & ORS.

Q: Which sections of the Income-tax Act were involved?

Section 148, Section 143(3), Section 154, Section 147, Section 144B

W.P.(C)/1922/2022HC DelhiDLHC01005138202227 March 2023Bench: HON'BLE MR. JUSTICE RAJIV SHAKDHER,HON'BLE MS. JUSTICE TARA VITASTA GANJU4 pages

AI SummaryPartly Allowed

What did the High Court hold?

The High Court held that the impugned notice dated March 31, 2021, and the impugned order dated December 29, 2021, were to be set aside. The primary reasoning was that the Assessing Officer (AO) had not dealt with the objections filed by the petitioner regarding the reopening of the assessment. Furthermore, the revenue had failed to file a counter-affidavit despite multiple opportunities, leading the Court to accept the assertions made in the writ petition as correct. The Court also took note of the fact that for Assessment Years 2015-16 and 2016-17, reassessment proceedings initiated on similar grounds (difference in turnover between Tax Audit Report and ITR) were dropped, with the petitioner's explanation being accepted. The AO was granted liberty to take further steps, but if reassessment proceedings were recommenced, the AO must consider the petitioner's objections and the fact that similar proceedings were dropped for other assessment years. The AO was to decide on recommencing proceedings within four weeks of receiving the judgment, providing the petitioner an opportunity to file fresh objections and be heard.

What were the facts?

The petitioner, Modi Industries Limited, filed a writ petition challenging a notice issued under Section 148 of the Income Tax Act, 1961, dated March 31, 2021, for Assessment Year 2014-15. The petitioner argued that an assessment under Section 143(3) was already completed on December 29, 2016, and reopening after four years required showing non-disclosure of material facts. The alleged discrepancy was in the sales turnover between the Tax Audit Report and the Income Tax Return. The petitioner had filed objections on July 9, 2021, stating the figures were reconciled and a notice under Section 154 had been issued. The petitioner contended that the order disposing of their objections on December 29, 2021, did not address their points. The High Court noted that the objections were not dealt with and granted a stay on reassessment proceedings. The revenue failed to file a counter-affidavit despite opportunities.

What were the issues?

1. Whether the Assessing Officer (AO) validly initiated reassessment proceedings under Section 147 of the Income Tax Act, 1961, by issuing a notice under Section 148 dated March 31, 2021, for AY 2014-15, when a regular assessment under Section 143(3) was already completed on December 29, 2016, and more than four years had elapsed. Assessee's Contention: The assessee argued that reassessment could not be reopened after four years unless the AO demonstrated that the assessee failed to disclose fully and truly all material facts. They contended that the alleged discrepancy in sales turnover was reconciled, and their objections to the reopening were not properly addressed in the disposal order. They also pointed out that for AY 2015-16 and AY 2016-17, reassessment proceedings on similar grounds were dropped. Revenue's Contention: The revenue did not file a counter-affidavit, and therefore, no specific contentions were recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 148,Section 143(3),Section 154,Section 147,Section 144B

AI-generated summary — verify with the full judgment below

$~1 * IN THE HIGH COURT OF DELHI AT NEW DELHI %

Date of decision: 27.03.2023

MODI INDUSTRIES LIMITED

..... Petitioner

Through: Mr Rohit Jain & Mr Saksham

Singhal, Advs.

versus

DEPUTY COMMISSIONER OF INCOME TAX & ORS.

..... Respondents

Through: Mr Abhishek Maratha, Sr. Standing

Counsel with Mr Akshat Singh, Jr.

Standing Counsel.

CORAM: HON'BLE MR JUSTICE RAJIV SHAKDHER HON'BLE MS JUSTICE TARA VITASTA GANJU [Physical Hearing/Hybrid Hearing (as per request)] RAJIV SHAKDHER, J.: (ORAL) 1. The first substantive hearing in the matter was held on 04.02.2022. On that day, after hearing counsel for the parties briefly, we had etched out the contours of the case. For the sake of convenience, the relevant part of the order dated 04.02.2022 is set forth hereafter: “2. This writ petition is directed, inter alia, against a notice issued under Section 148 of the Income Tax Act, 1961 [in short “the Act”]. The impugned notice is dated 31.03.2021 and concerns the assessment year (AY 2014-15. 3. Mr Rohit Jain, who appears on behalf of the petitioner, submits that an assessment under Section 143(3) of the Act was framed on 29.12.2016 i.e., before the issuance of the impugned notice. 3.1 According to Mr Jain, the assessment cannot be reopened, after four years have passed, unless the Assessing Officer (AO) is able to show that the petitioner did not disclose fully and truly all material facts. 3.2 At the heart of the matter, according to Mr Jain, is the purported dissonance in the sales turn over as shown in the Tax Audit Report and in the Income Tax Return [ ITR] filed by the petitioner. Digitally Signed By:SHEHROZ ALAM Signing Date:13.04.2023 11:59:38 Signature Not Verified

3.3 Mr Jain says that, after reasons were sought from the AO for initiating the process of reassessment, objections were filed by the petitioner vide letter dated 09.07.2021, whereby facts and figures were provided to demonstrate that there was in fact no discrepancy as alleged. 3.4 In other words, according to Mr Jain, the sales turnover in the Tax Audit Report and the petitioner‟s ITR was reconciled. 3.5 As a matter of fact, in this case, Mr Jain says that notice was issued to the petitioner under Section 154 of the Act, in response to which the petitioner had submitted the reconciliation statement. 3.6 It is emphasized by Mr Jain that the order, whereby objections to reopening of the assessment have been disposed of i.e., order dated 29.12.2021, none of the objections raised by the petitioner have been dealt with. [See Annexure-B, appended on page 95 of the case file.] 4. We have perused the order dated 29.12.2021. 4.1. Prima facie, we are of the view that the objections filed by the petitioner on 09.07.2021 have not been dealt with by the Assessing Officer. 5. Therefore, according to us, the matter requires further examination. 6. Issue notice. 6.1. Mr Abhishek Maratha accepts notice on behalf of the respondents/revenue. 6.2. Counter-affidavit(s) will be filed by the respondents/revenue within the next four weeks. Rejoinder(s) thereto, if any, will be filed before the next date. 7. In the meanwhile, there shall be a stay on the reassessment proceedings which have been initiated, via impugned notice dated 31.03.2021.” 2. As would be evident, we had granted four weeks to the respondent/revenue to file a counter-affidavit in the matter. 2.1 On the next returnable date, i.e., 07.09.2022, once again further four weeks were granted to respondent/revenue to file the counter-affidavit. On that date, interim order dated 04.02.2022 was made absolute during the pendency of the writ petition and accordingly, interlocutory applications were disposed of. 3. It is in this backdrop that the matter has been listed before the court today, i.e., 27.03.2023. There is a typographical error in the order dated 07.09.2022, as it indicates that the returnable date is 25.03.2022, instead of Digitally Signed By:SHEHROZ ALAM Signing Date:13.04.2023 11:59:38 Signature Not Verified

27.03.2023. 4. The record shows that the counter-affidavit has not been filed, despite opportunities being given in that behalf. 5. As noted by us on 04.02.2022, the objections filed with regard to the re-opening of the petitioner’s assessment have not been dealt with by the Assessing Officer (AO). In view of the fact that no counter-affidavit has been filed, we are constrained to set aside the aside the impugned notice dated 31.03.2021, as the assertions made in the writ petition would have to be taken as correct. 6. We may also note that it is the petitioner’s say that on the very same grounds as those raised for the Assessment Year (AY) in issue, reopening of the assessment for AY 2015-16 was dropped. For the sake of convenience, paragraph 2 of the order dated 15.03.2022, which focuses on the issue, based on which, reassessment was triggered, is set forth hereafter: “The case of the assessee for AY 2015-16 was re-opened for assessment u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter known as „the Act‟) due to reason that there was difference in the turnover as per the Tax Audit Report and as declared in the ITR filed by the assessee.” 7. The fact that the explanation of the petitioner was accepted by the AO is evident on perusal of paragraph 5 of the very same order. Accordingly, the said paragraph is also extracted hereafter: “After taking into account all relevant material available on record, assessment order is finalized u/s 143(3) r.w.s. 147 r.w.s. 144B of the Act without drawing any adverse inference.” 8. It is also stated by counsel for the petitioner that qua the same issue, reassessment was sought to be triggered qua AY 2016-17, which by an order of even date i.e., 15.03.2022 was also dropped. 9. Given the foregoing position, we are inclined to set aside the Digitally Signed By:SHEHROZ ALAM Signing Date:13.04.2023 11:59:38 Signature Not Verified

impugned notice dated 31.03.2021 and the impugned order dated 29.12.2021. 10. The AO will be at liberty to take next steps in the matter. However, if he does seek to recommence the reassessment proceedings, he will take into account not only the objections but also the fact that qua the very same issue, reassessment proceedings were dropped vis-a-vis AYs 2015-16 and 2016-17. 11. The decision with regard to recommencement of the assessment/reassessment proceedings will be taken by the AO within four weeks from the receipt of a copy of this judgment. In such an eventuality, the petitioner will be given liberty to file fresh objections and a hearing in the matter. Till such time, the interim order passed in the writ petition will continue to obtain. 12. Writ petition is disposed of in the aforesaid terms. 13. Registry will scan and upload the orders dated 15.03.2022 passed qua the AYs i.e., AY 2015-16 and 2016-17 so that they remain embedded in the case file.

(RAJIV SHAKDHER) JUDGE

(TARA VITASTA GANJU) JUDGE

MARCH 27, 2023 / r

Digitally Signed By:SHEHROZ ALAM Signing Date:13.04.2023 11:59:38 Signature Not Verified

More judgments on Section 148

Bha Associates Pvt. Ltd., New Delhi vs ACIT, Central Circle- 29, New Delhi
ITA 5208/DEL/2018[2015-16]Status: Disposed6 Nov 2026AY 2015-16
ACIT Central Bilaspur, Bilaspur vs Arun Kumar Agrawal, Sakti
ITSSA 26/RPR/2025[2018-19]Status: Disposed21 Oct 2026AY 2018-19
Vinod Agrawal, Kawardha vs Assisstant Commissioner of Income Tax…
ITA 666/RPR/2026[2019-20]Status: Heard21 Oct 2026AY 2019-20
Sar Business Tradelink Private Limited… vs Income Tax Officer, Ward - 1(2), Raipur
ITA 599/RPR/2026[2014-15]Status: Heard21 Oct 2026AY 2014-15
Neo Incorporation, Rajkot vs DCIT Circle- 1(2), Rajkot
ITA 471/RJT/2026[2012-2013]Status: Disposed21 Oct 2026AY 2012-2013

All 35,022 judgments and leading authorities on Section 148 →

Recent GST High Court judgments

Search GST case law →