> v. Deputy Commissioner Of Income-Tax (Exemption), Circle 1 (1), Delhi & Ors

$~22 *IN THE HIGH COURT OF DELHI AT NEW DELHI+W.P.(C) 39/2023NATIONALIST CONGRESS PARTY .....Petitioner Through:Mr. Ved Jain, Mr. Nischay Kantoor &Ms. Sonia Dodeja, Advs. Versus DEPUTY COMMISSIONER OF INCOME-TAX (EXEMPTION),CIRCLE 1 (1), DELHI & ORS......RespondentsThrough:Mr. Indruj Singh Rai, Mr. SanjeevMenon, Mr. Rahul Singh & Mr.Gaurav Kumar, Advs. % CORAM:HON'BLE MR. JUSTICE VIBHU BAKHRUHON'BLE MR. JUSTICE TEJAS KARIAO R D E R28.04.2025 1.The petitioner [Assessee] has filed the present petition, inter alia,impugning a notice dated 30.08.2022 [the impugned notice] issued underSection 148 of the Income Tax Act, 1961 [the Act] in respect of theassessment year 2015-16. The Assessee is, essentially, aggrieved bythe initiation of the reassessment proceedings for AY 2015-16, which werecommenced by issuance of the notice dated 28.06.2021 under Section 148 ofthe Act. 2.The Assessee is a national political party and is registered with theElection Commission of India by a certificate dated 10.01.2000. TheAssessee filed its return of income on 29.02.2016, declaring a Nil income,after claiming exemption under Section 13A of the Act. A deficiency notice was issued under Section 139(9) of the Act. In response to the notice ofdeficiency, the Assessee filed its return of income again on 24.05.2016,declaring Nil income after claiming exemption under Section 13A of theAct. Notably, the Assessee declared the entire income under the head‘Income from the other sources’. 3.The Assessee’s return income was selected for limited scrutiny and anotice dated 28.07.2016 was issued under Section 143(2) of the Act. TheAssessee responded to the said notice and also provided certain details to theAO. 4.The assessment proceedings culminated in an assessment order dated09.10.2017 passed under Section 143(3) of the Act. 5.Thereafter, on 19.04.2021, 23.04.2021 and 09.06.2021, notices wereissued by respondent no.1 to the Assessee, inter alia, seeking to verifywhether the debit and credit transactions in two bank accounts maintainedby the Assessee with the Bank of Maharashtra had been accounted for in thebooks of account. The Assessee replied to the aforesaid notices by theletters/emails dated 21.04.2021, 26.04.2021, 11.06.2021 and 18.06.2021,stating that the assessment had already been completed and that all requisiteinformation and documents, as sought by the AO, had been duly furnishedduring the course of the assessment proceedings. It was submitted that theAO, after verifying the submissions and satisfying himself with theexplanations offered, had allowed the claim of deduction under Section 13Aof the Act. It was also clarified that the two bank accounts referred to in thenotice issued under Section 133(6) of the Act were duly reflected in thebooks of accounts. 6.On 28.06.2021, the AO issued a notice under Section 148 of the Actto the Assessee for reopening the assessment for AY 2015-16. The saidnotice was unsustainable as it was issued in accordance with the statutoryregime as existed prior to 31.03.2021. The said notice including othernotices which were issued after 01.04.2021 but following the statutoryregime regarding reopening of assessments that existed prior to 31.03.2021was subject matter of challenge before this court and other High Courts.This court in the case of Mon Mohan Kohli v. Assistant Commissioner ofIncome and Anr.: Neutral Citation No.: 2021:DHC:4181-DB set asidesuch notices that were issued after 31.03.2021 without following theprocedure as prescribed under Section 148A of the Act. Various High courtshad also expressed similar views. 6.On 28.06.2021, the AO issued a notice under Section 148 of the Actto the Assessee for reopening the assessment for AY 2015-16. The saidnotice was unsustainable as it was issued in accordance with the statutoryregime as existed prior to 31.03.2021. The said notice including othernotices which were issued after 01.04.2021 but following the statutoryregime regarding reopening of assessments that existed prior to 31.03.2021was subject matter of challenge before this court and other High Courts.This court in the case of Mon Mohan Kohli v. Assistant Commissioner ofIncome and Anr.: Neutral Citation No.: 2021:DHC:4181-DB set asidesuch notices that were issued after 31.03.2021 without following theprocedure as prescribed under Section 148A of the Act. Various High courtshad also expressed similar views. 7.The Revenue filed appeals against the decisions rendered by variousHigh Courts that had set aside the notices issued under Section 148 of theAct. In an appeal arising from a decision of the Allahabad High Court, theSupreme Court in the case of Union of India & Ors. v. Ashish Agarwal:(2023) 1 SCC 617, issued directions under Article 142 of the Constitution ofIndia for considering the said notices as the notices issued under Section148A(b) of the Act and further granted time to the Assessing Officers tofurnish information and the material on which such notices were premised. 8.In compliance with the directions issued by the Supreme Court in thecase of Union of India & Ors. v. Ashish Agarwal (supra), the AO providedthe information and material to the Assessee on 30.05.2022. The Assesseewas granted two weeks’ time to respond to the said notice. The Assesseeresponded to the notice dated 30.05.2022 by a letter dated 13.06.2022,stating that the two bank accounts referred to by respondent no. 1 were duly recorded in its books of account and reflected in its audited financialstatements for financial year 2014-15. The Assessee stated that it is aregistered national political party. The Assessee claimed that it hadparticipated in the General and Maharashtra State Assembly Electionsduring the relevant year, and the details, including sources of donations,were publicly available. The Assessee contended that the AO allowed adeduction of ₹67,32,50,826/- under Section 13A of the Act, representing income from donations, coupon money, fees, subscriptions, and interest,after due scrutiny and verification of all relevant material. The depositstotaling ₹37,47,81,848/- in the said accounts were sourced from donations and coupon receipts. Thus, the AO had no new material suggesting incomeescapement other than the information, which was already part of theassessment records. 9.Thereafter, the AO again provided the information to the Assessee21.07.2022 following the directions given in the case of Union of India &Ors. v. Ashish Agarwal (supra) and granted seven (7) days time to theAssessee to respond to the same. The Assessee, by its letter dated27.07.2022, reiterated the submissions made in its earlier reply dated13.06.2022. 10.The AO passed an order under Section 148A(d) of the Act on30.08.2022 and issued the impugned notice dated 30.08.2022 under Section148 of the Act. The Assessee contends that the proceedings initiatedpursuant to the impugned notice dated 30.08.2022 are required to be setaside in view of the concession made by the Revenue before the SupremeCourt in Union of India and Ors. v. Rajeev Bansal: 2024 INSC 754. 11.It is relevant to refer to paragraph 19(e) and 19(f) from the decision ofthe Supreme Court in Union of India and Ors. v. Rajeev Bansal (supra),which sets out the concession as made on behalf of the Revenue: 10.The AO passed an order under Section 148A(d) of the Act on30.08.2022 and issued the impugned notice dated 30.08.2022 under Section148 of the Act. The Assessee contends that the proceedings initiatedpursuant to the impugned notice dated 30.08.2022 are required to be setaside in view of the concession made by the Revenue before the SupremeCourt in Union of India and Ors. v. Rajeev Bansal: 2024 INSC 754. 11.It is relevant to refer to paragraph 19(e) and 19(f) from the decision ofthe Supreme Court in Union of India and Ors. v. Rajeev Bansal (supra),which sets out the concession as made on behalf of the Revenue: “The Finance Act 2021 substituted the old regime for re-assessment with a new regime. The first proviso to Section 149does not expressly bar the application of TOLA. Section 3 ofTOLA applies to the entire Income-tax Act, including Sections 149and 151 of the new regime. Once the first proviso to Section149(1)(b) is read with TOLA, then all the notices issued between 1April 2021 and 30 June 2021 pertaining to assessment years 2013-14, 2014-15, 2015-16, 2016-17, and 2017-18 will be within theperiod of limitation as explained in the tabulation below: f. The Revenue concedes that for the assessment year 2015-16, allnotices issued on or after 1 April 2021 will have to be dropped asthey will not fall for completion during the period prescribed underTOLA;” 12.In view of the above concession, the impugned notice and theproceedings relating thereto are required to be set aside. We may also notethe decision of the Supreme Court in Deepak Steel and Power Ltd. v.Central Board of Direct Taxes and Ors.: Civil Appeal No.5177/2025, decided on 02.04.2025. The said appeal arose from orders passed by theHon’ble High Court of Orissa and Cuttack declining to entertain batch ofpetitions filed by the Assessees. The attention of the Supreme Court wasdrawn to the concession made on behalf of the Revenue in Union of India& Ors. v. Rajeev Bansal (supra) and noting the same, the Supreme Courtallowed the appeals. The relevant extract of the said decision is set outbelow: “4. The learned counsel appearing for the revenue with hisusual fairness invited the attention of this Court to a threejudge bench decision of this Court in Union of India and Ors.v. Rajeev Bansal, reported in 2024 SCC OnLine SC 2693,more particularly, paragraph 19(f) which reads thus:- “19. (f) The Revenue concedes that for the assessmentyear 2015-2016, all notices issued on or after April 1,2021 will have to be dropped as they will not fall forcompletion during the period prescribed under theTaxation and other Laws (Relaxation and Amendment ofCertain Provisions) Act, 2020.” 5. As the revenue made a concession in the aforesaid decisionthat is for the assessment year 2015-2016, all notices issuedon or after 1st April, 2021 will have to be dropped as theywould not fall for completion during the period prescribedunderthetaxationandotherlaws(RelaxationandAmendment of certain Provisions Act, 2020). Nothing furtheris required to be adjudicated in this matter as the notices sofar as the present litigation is concerned is dated 25.6.2021. 6. In view of the aforesaid, in such circumstances referred toabove the original writ petition nos.2446 of 2023, 2543 of2023 and 2544 of 2023 respectively filed before the HighCourt of Orissa at Cuttack stands allowed. 13.The notice dated 30.08.2022 issued under Section 148 of the Actstands quashed and set aside. Concededly, the controversy is covered infavour of the Assessee by the decision of this court in Makemytrip India Pvt. Ltd. v. Deputy Commissioner of Income Tax Circle 16 (1) Delhi &Anr.: Neutral Citation No.: 2025:DHC:1892-DB. 14.The petition is, accordingly, allowed and all proceedings initiatedpursuant thereto are set aside. VIBHU BAKHRU, J APRIL 28, 2025RK/KS TEJAS KARIA, J Click here to check corrigendum, if any