Delhi High Court: Revenue Department Cannot Take Fresh Ground Which Was Not Disclosed To Taxpayer, While Passing Re-assessment Under Section 148A(D)

The Delhi High Court in the case Tosca Master vs. Deputy CIT observed and has found major flaw in the fundamental premise of the Revenue Department that the investment made by the taxpayer in shares amounted to ‘income’ which has escaped assessment.

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The court in the case quashed the proceedings initiated under section 148A of the Income tax Act.

The court observed that the foundational material alone would be relevant for the purposes of evaluating whether reassessment powers were justifiably invoked.

The High Court also clarified that the Revenue Department cannot take a fresh ground while passing order u/s 148A(d) of the Income tax Act.

The Section 148A of Income tax Act stated that if an income tax officer believes that a taxpayer attempted to avoid paying taxes for any assessment year, the officer may notify the taxpayer that there will be a reassessment.

The Division bench comprising of Justice Yashwant Varma and Justice Ravinder Dudeja in the case observed that, the basis of order passed under section 148A of the Income tax Act is the alleged discrepancy noticed between the share prices as provided by the petitioner from the exchange rate, NSE.