Dept. Initiated Reassessment By Deviating From Prior View Without Any Cogent Reasoning: Delhi High Court Quashes Reassessment Notices

The Delhi High Court has quashed the reassessment notices on the grounds that the department has initiated reassessment by deviating from prior views without any cogent reasoning.

The bench of Justice Rajiv Shakdher and Justice Girish Kathpalia has observed that the reassessment notice and order suffered from two infirmities, namely that it was proceeded on a view inconsistent with the earlier order despite the facts and circumstances being similar, and the ACIT concerned did not support the subsequent divergent view with reasoning.

The petitioner is a senior citizen, the proprietor of M/s Chopra Brothers, an authorized dealer for Kiloskar Electric Motors, and is engaged in the trading of industrial electric motors, mono-block pumps, generator sets, etc.

For the assessment year 2015-16, the petitioner filed a return of his income, declaring it to be Rs. 19,94,970/-, which was processed under Section 143(1) of the Act. On April 7, 2021, the respondent issued a notice under Section 148 of the Act, which was challenged by the petitioner.

The respondent dropped the proceedings pertaining to the assessment year 2016–17, concluding that there was no escapement of income during the financial year 2015–16 relevant to the assessment year 2016–17. There was no entry of a transaction of sale or purchase by the bogus entity M/s Divya International, controlled by the entry operator Rajeev Khushwaha, to or from M/s Chopra Brothers. It was held that it was not a fit case for issuance of notice under Section 148.

But soon thereafter, for the assessment year 2015-16, the respondent rejected the case set up by the petitioner, observing that there was an escapement of income during the financial year 2014-15 relevant to the assessment year 2015-16. It was held that it was a fit case for the issuance of notice under Section 148. Accordingly, the notice followed by the order was issued against the petitioner for the assessment year 2015-16.

The court noted that consistency does not mean putting iron fetters on subsequent decision-making. It only means expecting that a deviation from the previous decision in a similar set of circumstances is explained by way of cogent and rational reasons.

The court held that the decision taken first in point of time was a reasoned decision based on the analysis of material on record, but the decision taken subsequently not only took a view completely inconsistent with the previous view but also without an iota of reason.

Case Title: Prem Kumar Chopra Versus ACIT

Citation: 2023 LiveLaw (Del) 468

Case No.: W.P.(C) 12104/2022

Date: 25.05.2023

Counsel For Petitioner: Deepak Chopra

Counsel For Respondent: Abhishek Maratha

Click Here To Read The Order