Delhi High Court seeks response to Newslaundry’s plea against income tax notices

The Delhi High Court has sought a response on a petition filed by Newslaundry against the reassessment notices issued to it under the Income Tax Act for 2017-2018 and 2019-2020. The reassessment notice was issued on grounds that the assessment of income for these years was not done.

The Income Tax department had conducted a “survey” on Newslaundry in September 2021. During the “survey”, the personal phone and laptop of Newslaundry co-founder Abhinandan Sekhri was taken away.

A division bench of Justice Manmohan and Justice Manpreet Pritam Singh Arora asked the director general and deputy commissioner of income tax to respond to Newslaundry’s petition on October 17. The matter will next be heard on May 2, 2023.

In its petition, Newslaundry has stated that the reassessment notices have been issued without any basis. There was no fresh material on record to initiate the reassessment proceedings which is why there was no rationale in believing that an assessment had not been made.

During the hearing, advocate Nipun Katyal appearing for Newslaundry said, “The notices have been issued on the strength of the survey conducted under Section 133A of the IT Act. Not only are the notices vague, but these are also contrary to the constitutional principles of reasonableness, and nonarbitrariness.”

The two notices are dated April 4 and April 29 and have been issued under section 148 of the Income Tax Act. In its petition, Newslaundry has also challenged the constitutional validity of sub clause (ii) of the second explanation as mentioned in the amended section 148A of the Act read with Section 148A(a). Under this provision, during a survey the assessing officer is "deemed to have information which suggests" that income chargeable has escaped assessment.

“Information suggesting that income has escaped assessment cannot be construed to mean that the AO has 'reason to believe' that the income has escaped assessment. 'Reason to believe' has judicial and constitutional acceptance and acts as a safeguard against arbitrary action by the respondent authorities,” the petition states.