The Division Bench of Delhi High Court has stayed order under Section 148A(d) and consequential notice finding that the Assessing Officer had committed error in law in framing initial assessment.
KumKum Kohli filed the writ petition assailing the order dated 23.07.2022 passed under Section 148A(d) and the consequential notice. The petitioner sold shares and earned therefrom long-term capital gains. In the preceding AY 2014-15, the long-term capital gain was offered for taxation. In the AY in issue, the petitioner claimed exemption under Section 54F of the Act.
Queries were raised, regarding deduction claimed under Section 54F of the Act. It is only thereafter that an assessment was framed on 24.11.2017 under Section 143(3) of the Act.
The petitioner claims that she gave a detailed reply, with regard to the sale consideration received on the sale of shares concerning an entity.
In sum, the petitioner asserted that she had claimed a deduction under Section 54F of the Act on account of investment in the said residential property. agreement to sell was executed between the petitioner and her husband, who since then, we are told, has expired.
Sumit Lalchandani on behalf of the petitioner submitted that the transaction was also examined by the concerned Assessing Officer (AO) in respect of the return filed by the petitioner’s husband.
He further submitted that reassessment proceedings are based on an internal audit objection, whereas, at the relevant point in time, reassessment proceedings, if at all, could have been triggered based on an objection raised by the Comptroller and Auditor General of India
Sunil Agarwal, on behalf of the revenue submitted that the internal auditor had only flagged the error in law committed by the AO in framing the initial assessment under Section 143(3) of the Act. Consequently, according to Mr Agarwal, the argument advanced on behalf of the petitioner is not sustainable.
The Division Bench of Justice Rajiv Shakdher and Justice Tara Vitasta Ganju stayed the impugned order and notice observing that,
“We have taken note of the fact that the expression “any audit objection” was introduced only by Finance Act, 2022 albeit w.e.f. 01.04.2022. Prior to the said amendment, the expression which was obtained in Explanation 1(ii) appended to Section 148 of the Act advertised to the “Comptroller and Auditor General of India”. 10. We are, prima facie, also of the view that if the AO, according to the respondents/revenue, had committed an error in law.”
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