Insight Portal Data u/s 147:
Harvinder Singh vs.Principal CIT [W.P.(C) 7322 of 2022]
Background of the Case
The petitioner, Mr. Harvinder Singh, challenged the reassessment proceedings initiated by the Income Tax Department under Section 148A(b) of the Income Tax Act, 1961. The Income Tax Department, based on its Insight Portal data, issued a notice under Section 148A(b) for Assessment Year 2019-20, alleging unexplained investment in immovable property worth Rs. 2.5 crore.
Arguments by the Appellant
The petitioner argued that the reassessment proceedings were initiated without proper jurisdiction, as there was no tangible material to justify the reopening of the case. The reasons for reopening were vague and based on mere suspicion rather than concrete evidence. The notice was issued beyond the permissible time limit, rendering it time-barred and unsustainable.
Further the petitioner stated that The ITD failed to provide an opportunity for the petitioner to respond before issuing the reassessment notice, violating the principles of natural justice.
Respondent’s Response
The respondent argued that the reassessment proceedings were initiated based on credible information suggesting underreporting of income. The ITD had followed due process in issuing the notice under Section 148 and had reasons to believe that income had escaped assessment. The procedural lapses, if any, were minor and did not vitiate the reassessment proceedings. The amendment in the Income Tax Act did not render the reassessment proceedings invalid as long as the substantive requirements were met.
The respondent further argued by expanding the scope of allegations to include investments in luxury cars and facilitation of undisclosed investments for officials, bureaucrats, and judicial officers.
Court Findings and Decision
The Delhi High Court noted that the AO had failed to provide any material connecting the alleged investments to AY 2019-20. The court emphasized that the AO must have tangible material to form a belief that income has escaped assessment. In this case, the information from the Insight Portal was vague and unsubstantiated. The court quashed the order under Section 148A(d) and the notice under Section 148, holding that the reassessment proceedings were unsustainable in law.
The court relied on several precedents, including ATS Infrastructure Ltd. vs. ACIT and CIT v. Kelvinator of India Ltd., to reiterate that reassessment proceedings cannot be based on a mere change of opinion or unsubstantiated assumptions.
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