Delhi High Court Dismisses Insurance Broker's Plea Against Income Tax Reassessment, Cites Earlier Case

The Delhi High Court has dismissed a writ petition filed by Zoom Insurance Brokers challenging proceedings initiated under Sections 148A(3) and 148 of the Income Tax Act, 1961, observing that an identical challenge by the company for the preceding assessment year had already been rejected by a Coordinate Bench.

The Division Bench of Justices Dinesh Mehta and Aditi Choudhary noted that the facts of the present case were identical to those considered in Petitioner's earlier case, except for the assessment year.

“Being guided by the judicial discipline, we cannot take a view other than what the Coordinate Bench had taken in petitioner's own case,” it observed.

Petitioner had challenged an order dated June 30, 2026 passed under Section 148A(3) of the Income Tax Act as well as the consequential notice issued under Section 148 for Assessment Year 2020-21.

The Income Tax Department opposed the petition at the outset, pointing out that Petitioner had earlier challenged an identical notice issued for Assessment Year 2019-20 and that the High Court had refused to entertain the writ petition.

Petitioner accepted that the information and allegations forming the basis of the present Section 148A(1) notice were “almost identical” to those in the earlier notice. However, it contended that the Coordinate Bench, while rejecting the earlier petition, had not properly considered an order passed in T S G International Marketing Private Limited v. Income Tax Officer, Ward 25(3), Delhi.

The Department submitted that the order relied upon by Petitioner in T S G International Marketing was only an interim order, whereas the judgment in Petitioner's own case was a final order.

The Court then referred to its earlier decision concerning Assessment Year 2019-20.

In that case, the proceedings arose from information received following a search and seizure operation conducted on Middle Layer Business Entities (MLBEs) in the insurance sector. According to the information referred to in the notice, the MLBEs were allegedly acting as pass-through entities through which payments made by insurance companies were ultimately transferred to insurance agents, intermediaries, master policy holders or their nominees.

The investigation covered 37 MLBEs and involved post-search verification of 32 insurance companies.

In the case of Zoom Insurance Brokers, the Income Tax authorities had referred to a transaction of ₹82,25,822 with IFFCO-Tokio General Insurance Company Ltd. The Assessing Officer had concluded that the case was fit for issuance of notice under Section 148 after considering the material and the assessee's response.

Before the High Court, the insurance broker had contended that the amount of ₹82.25 lakh had already been disclosed as income in its books and income tax return. It relied upon an email confirmation from IFFCO-Tokio and invoices to contend that the amount represented legitimate brokerage income.

The earlier Coordinate Bench, however, had held that whether the transaction was genuine or a spurious transaction resulting in income escaping assessment was an exercise to be undertaken by the Assessing Officer and not by the High Court at the notice stage.

In this backdrop, the Court dismissed the writ petition.

For Petitioner: Advocate Mukesh Gupta

For Respondents: Advocate Ruchir Bhatia, SSC with Anant Mann, JSC & Pratyuksh Gupta, JSC.