The Delhi High Court has stayed reassessment proceedings involving ₹17.66 crore against a company. The Court observed that the Assessing Officer had already acknowledged that the amount belonged to the company and had been accounted for as cash sales for tax purposes.
The Division Bench of Justices Dinesh Mehta and Aditi Choudhary was hearing a petition contesting a notice issued u/s 148 of the Income Tax Act, 1961, for AY 2024-25.
This matter relates to a search conducted on May 12, 2024, at the premises of Ashish Kapoor, a director of the petitioner company. During the search, ₹17.66 crore in cash was recovered from the lockers of Kapoor and Shakun Tamang.
Later, Kapoor stated that the cash belonged to the petitioner company and was derived from its sales. The company had also declared this amount as cash sales in its income tax return and offered to pay tax on it. The company requested that the seized amount be treated as self-assessment tax or adjusted against its tax liability.
U/s 143(1), the company’s return was processed. However, credit or adjustment for self-assessment tax was not granted. Subsequently, the ITAT allowed the company’s appeal and directed the Assessing Officer to issue a refund of ₹17.66 crore after adjusting the total tax liability.
Meanwhile, the scrutiny assessment of Ashish Kapoor under Section 143(3) had been completed. The same Assessing Officer who later issued the impugned notice had acknowledged during those proceedings that the ₹17.66 crore belonged to the petitioner company and had accepted its returned income.
The company, before the HC, claimed that the amount had been considered as its own and had been offered to tax; then the amount could not be considered as income that had not undergone assessment.
The Income Tax Department said that notice was issued in accordance with the search, and the fact that the amount was of the company was not conclusive of whether it had been correctly offered as income.
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The High Court remarked that the facts of the case were “quite shocking.” The Court noted that Kapoor had attributed the amount to the company, the company itself had recorded it as a cash sale, and the ITAT the final fact-finding authority had accepted the company’s contention and directed that the amount be treated as self-assessment tax.
It was further stated that the Assessing Officer who had conducted Kapoor’s assessment on March 27, 2026, had himself acknowledged that the seized amount belonged to the petitioner company.
“Such being the position, now taking the plea, that though this amount belongs to Kapoor Industries Limited but still the income to the tune of Rs.17,66,50,000/- has escaped assessment… simply because petitioner’s assessment was made under Section 143(1) of the Act of 1961 cannot be countenanced,” it said.
The Court asked why the assessing officer had not conducted the company’s assessment previously, when its matter had been centralised after the search, and the director himself had attributed the cash to the company.
The Court upheld that the case needed consideration and then issued notice to the department and granted 6 weeks to submit its response.
Meanwhile, the Court stayed the proceedings arising from the notice issued under Section 148 and fixed December 15 as the date for the final hearing of the matter.
| Case Title | Kapoor Industries Limited v. Deputy Commissioner Of Income Tax |
| Case No. | W.P.(C) 9137/2026 & CM APPL 42928/2026 |
| For Petitioner | Mr. Sachit Jolly |
| For Respondent | Mr. Puneet Rai |
| Delhi High Court | Read Order |
