The Delhi High Court paused reassessment proceedings under Section 148 after noting the same Assessing Officer had earlier accepted that cash seized during a search belonged to the company and had been declared as cash sales in its return.
The court stayed the Section 148 notice challenging reassessment of ₹17.66 crore because the Assessing Officer had previously acknowledged the amount as belonging to the company and accepted its returned income.
A Division Bench issued notice to the Income Tax Department, granted six weeks for a response, and fixed December 15 as the final hearing date while staying reassessment proceedings.
# What happened
# Why the court intervened
Because the amount had been recorded by the company as cash sales and offered to tax before the AO issued the reassessment notice, the court questioned whether it could now be treated as income that had escaped assessment. The court described the sequence of facts as striking and asked why the company's assessment had not been completed earlier when the matter was centralised after the search and the director himself attributed the cash to the company.
# Process and interim orders
The company petitioned the High Court against the notice issued under Section 148 for AY 2024-25. The Income Tax Department defended the reassessment on the ground that the notice was issued in light of the search, and that the fact the amount belonged to the company did not conclusively establish that it had been correctly offered to tax.
# What was already decided by other authorities
These findings factored into the High Court's decision to stay reassessment.
# Practical implications for taxpayers and tax officers
Tax officers: Reopening assessments after centralisation of search material requires clear reasoning. Where an AO previously accepted a factual position and appellate orders have followed, issuance of a fresh Section 148 notice risks judicial scrutiny.
# Case details
# Bottom line
The High Court's interim order pauses reassessment while the department explains why reopening is justified despite prior acceptance of the amount as the company's cash sales and an ITAT direction for refund or adjustment.
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