By CA Sombir Singh The Delhi High Court quashed the assessment order and held that Section 292B of the Income Tax Act, 1961 cannot be used to save an assessment order passed by overlooking errors apparent on face of the record. However, the court upheld the validity of the impugned notice issued under Section 148 of the Income Tax Act, 1961, subject to rectification of the inadvertent error in the annexed information. The respondents were directed to provide the petitioner with the correct information within a week to enable him to file an appropriate reply.
The assessee challenged the reassessment proceedings initiated by the Income Tax Department for AY 2020-21, contending that the impugned notice under Section 148 of the Act was issued based on erroneous information collected under Section 135A. It was argued that the information pertained to a different assessee with no connection to the assessee. In support of his arguments, the assessee relied on the Bombay High Court’s judgment in Benaifer Vispi Patel vs. Income Tax Officer, (2024) 165 taxmann.com 5 (Bom), where a reassessment notice was quashed due to procedural irregularities.
The department defended the issuance of the reassessment notice, arguing that the case was identified as a high-risk case under the e-Verification scheme issued under Section 135A of the Act. They asserted that Explanation 1(iv) to Section 148 permits the Assessing Officer to bypass the procedure under Section 148A when information is obtained under Section 135A. Accordingly, they claimed that the reassessment notice was valid and did not require the issuance of a prior show-cause notice under Section 148A. Further, the respondents acknowledged that an inadvertent clerical mistake had occurred in annexing information related to a different assessee along with the notice under Section 148. However, they contended that this mistake did not affect the validity of the reassessment notice itself, as the underlying information related to the assessee (unverified cash deposits) was correctly reflected in the tax records and had been duly approved by the Specified Authority under Section 151.
The court found that while the petitioner was correct in pointing out the error in the annexed information, this procedural lapse did not invalidate the entire reassessment process. The court observed that the Insight Portal of the Income Tax Department had correctly recorded unverified cash deposits related to the petitioner. The Assessing Officer had sought and obtained approval from the Specified Authority under Section 151, based on this information.
However, the court held that the impugned order dated 03.02.2025, which disposed of the petitioner’s objections, was vitiated due to a lack of due consideration of the procedural irregularity. It concluded that the respondents had failed to apply their mind to the petitioner’s objections and, therefore, the order deserved to be quashed.
The court directed the respondents to rectify the mistake and provide the petitioner with the correct information, as recorded in the Insight Portal and the approval granted by the Specified Authority, within a week. The petitioner was granted an opportunity to file his reply based on the corrected information.
Case title: Monish Gajapati Raju Pusapati v. Assessment Unit Income Tax Department & Anr
Date of order:27.02.2025