Order and SCN differ on the legal grounds; Delhi HC dismisses the case
Facts and issue of the case
The writ petition has been filed challenging the notice issued under Section 148 of the Income Tax Act, 1961 (‘the Act’) dated 25th June, 2021 as well as the notice issued under Section 148A A(b) of the Act dated 21st May, 2022, order passed under Section 148A(d) of the Act dated 29th July, 2022 and the notice issued under Section 148 of the Act dated 30th July, 2022 for the Assessment Year 2017-18.
M/s. Usha Rani Girdhar (“the Petitioner”) had sold the immovable property in the Assessment Year 2017-18 and the long-term capital gain arose by such transaction was not disclosed in the Income Tax Return (“ITR”) of same period.
In accordance with information obtained from an Income Tax Officer (“ITO”), the AO informed the Petitioner of a Notice under Section 148A(b) of the Income Tax Act, 1961 (“the IT Act”), dated May 21, 2022 (“Notice”), alleging that the Petitioner had failed to disclose a long-term capital gain.
The AO then passed an Order dated July 29, 2022 in accordance with Section 148A(d) of the IT Act (hereinafter referred to as “the Order”), and issued a SCN dated July 30, 2022 in accordance with Section 148 of the IT Act, for initiating proceeding for the Assessment Year 2017-18.
The Notice and the Order, according to the petitioner, were for two different immovable properties. The Order was given for the property in Rohini Section-34 in Delhi, whereas the Notice was for the property in Kingsway Camp in Delhi.
The Revenue (“the Respondent”) accepted the mistake of issuance of the Notice and the Order related to distinct immovable properties and prayed before the High Court to rectify mistake by issuing a Supplementary Notice under Section 148A(b) of the IT Act
Whether the tax authorities can issue Supplementary Notice for incorporating primary allegation which was not present in the Notice?
It was held that the intent of issuing Notice under Section 148A(b) of the IT Act is to inform the Petitioner of the allegations against him with sufficient particulars so that he can put forward his defence.
Relied on the ruling in Catchy Prop-Build Private Ltd. v. Assistant Commissioner of Income Tax & Anr.,  448 ITR 671 (Del) and determined that if the foundation allegation was missing from the notice issued under Section 148A(b) of the IT Act, the same cannot be incorporated by issuing a supplementary notice.
Present writ petition is allowed and the show cause notice issued under Section 148A(b) of the Act as well as the order passed under Section 148A(d) of the Act and the notice issued under Section 148 of the Act for the Assessment Year 2017-18 are set aside.
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