Case Note & Summary
The dispute involved a writ petition filed by an assessee challenging reassessment proceedings initiated by the Income Tax Department. The petitioner, Champion Exim Co., sought to quash orders and notices issued under Sections 148 and 148A of the Income Tax Act, 1961, for Assessment Year 2018-19. The factual background revealed that the High Court had previously, in Special Civil Application No. 7429 of 2022, quashed earlier reassessment orders and directed the department to provide the petitioner an opportunity to file a reply under Section 148A(b) and then pass a fresh order. Instead of complying with this direction, the department issued a fresh notice under Section 148A(b) on 14.08.2025. The petitioner filed a reply requesting specific information including details from investigation reports, approval under Section 151, evidence linking the petitioner to alleged gold disk consignment, and corroborative evidence. The department failed to supply this requested information but proceeded to pass the impugned order under Section 148A(d) on 12.09.2025. The core legal issues centered on whether the reassessment proceedings violated principles of natural justice and whether the department complied with previous court directions. The petitioner argued that non-supply of requested material violated natural justice, while the department's counsel admitted the material was not supplied. The court analyzed the previous court direction which specifically maintained the notice under Section 148A(b) dated 29.03.2022 and directed continuation from that stage, finding no justification for issuing a fresh notice. The court also examined the petitioner's specific requests for information and found the department's failure to supply such material constituted a violation of natural justice principles. The court referenced the Supreme Court decision in Union of India v. Rajeev Bansal and CBDT Circular dated 1.8.2022 to support its reasoning. The court held that the department's actions in issuing a fresh notice contrary to court direction and failing to supply requested information violated both procedural fairness and natural justice. The final decision quashed the impugned order dated 12.09.2025 under Section 148A(d), the notice dated 12.09.2025 under Section 148, and directed the department to re-initiate proceedings from the stage of the notice under Section 148A(b) dated 19.03.2022, requiring supply of all requested documentary evidence to the petitioner before proceeding further.
Headnote
A) Tax Law - Income Tax Reassessment - Natural Justice Violation - Income Tax Act, 1961, Sections 148, 148A(b), 148A(d) - Petitioner challenged reassessment proceedings alleging violation of natural justice as department failed to supply requested information - Court found department issued fresh notice contrary to previous court direction and denied petitioner access to material evidence - Held that such actions violated principles of natural justice and quashed impugned orders (Paras 5-10). B) Tax Law - Income Tax Reassessment - Compliance with Court Directions - Income Tax Act, 1961, Sections 148, 148A(b), 148A(d) - Previous court had quashed earlier reassessment orders and directed continuation from notice stage - Department instead issued fresh notice under Section 148A(b) - Court held department should have continued proceedings from stage directed in previous order, not issued fresh notice - Violation of court direction rendered subsequent proceedings invalid (Paras 5, 8).
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Issue of Consideration: Whether the reassessment proceedings initiated by the Income Tax Department were valid given the violation of natural justice principles and non-compliance with previous court directions
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Final Decision
Court allowed the petition, quashed impugned order dated 12.09.2025 under Section 148A(d), impugned order dated 12.09.2025 under Section 148, and impugned notice dated 12.09.2025 under Section 148. Directed respondents to re-initiate proceedings from stage of notice under Section 148A(b) dated 19.03.2022, supply all requested documentary evidence to petitioner, and pass fresh order after hearing within 12 weeks. Rule made absolute. No order as to costs.
