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Informist, Friday, Aug. 21, 2026

 

NEW DELHI – The Delhi High Court has observed that an income tax assessing officer's duty is not only to protect the interests of its department and generate revenue for the government, but also to judiciously consider the reply and pleas in assessment cases. Brushing aside or ignoring documents filed by an assessee leads to a breach of the principles of natural justice, violates procedural fairness and causes injustice, the high court said.

 

The bench of Justice Dinesh Mehta and Justice Rajneesh Kumar Gupta pulled up the assessing officer for ignoring the replies and documents filed by New Look Builders and Developers Pvt. Ltd. in the assessment proceedings. Although the Commissioner of Income Tax (Appeals) dealt with each document filed by the assessee in great detail and care while giving the page numbers, the assessing officer completely ignored them. "He (assessing officer) has not even referred to them, let alone dealing with them. We hasten to add that an adjudicatory process enjoins upon an AO (assessing officer) to deal with the reply and documents filed by the assessee in an objective manner," the bench said.

 

The high court rejected the Income Tax Department's plea seeking to add INR 550 million to the income of New Look Builders for assessment year 2011-12, alleging that investment made by New Dimension Holdings Ltd. of Mauritius and Velford Ventures Ltd. of Cyprus in the assessee company was unexplained. The high court upheld the Income Tax Appellate Tribunal's order that the investment by the two companies in the assessee was genuine and duly explained, and the demand raised by the assessing officer has "no legs to stand".
 

In a 2015 assessment order, the assessing officer held that the onus to prove the creditworthiness of the amount received was on the assessee, and since it failed to discharge that burden, the department added INR 550 million to its income.

 

New Look Builders argued that it was ironic that, despite the material and due explanation they provided, the assessing officer deliberately did not address it. The company argued that the assessing officer knew it was paying an interest rate of 16% on the compulsory convertible debentures, yet the officer ignored that and addressed only the part that suited the officer's views and whims, while ignoring the company's reply.  End

 

Reported by Surya Tripathi

Edited by Saji George Titus

 

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