2018 (7) TMI 2180 - HC - Income Tax

Reopening of assessment u/s 147 - re-assessment proceeds on information received from Deputy Director of Investigation - likehood of suspicious transactions - HELD THAT - The information received from the Assistant Director of Income-Tax dated 24th March, 2017 referred to certain transactions as suspicious transactions and called upon the Assessing Officer to verify the transactions as there is a likelihood that income chargeable to tax has escaped assessment. The reasons in support of the impugned notice do not indicate any application of mind and/or further processing of the information to come to a reasonable belief that income chargeable to tax has escaped assessment. Infact, it proceeds on the basis that transactions are suspicious. The reasons also do not specify, prima-facie, the quantum of tax which has escaped assessment but merely states that it would be atleast be ₹ 1,00,000/-. Prima-facie, we are of the view that the reasons recorded do not indicate reasonable belief of the Assessing Officer himself to issue the impugned notice. Thus, prima-facie, the impugned notice is without jurisdiction. Accordingly, till the final disposal of this petition, there shall be interim stay of the impugned notice issued under Section 148 - Decided in favour of assessee.

Summary

Issues:
Challenge to notice under Section 148 of the Income-Tax Act, 1961 for reopening assessment for the Assessment Year 2010-11.

Analysis:
The petition challenges a notice issued under Section 148 of the Income-Tax Act, 1961, seeking to reopen the assessment for the Assessment Year 2010-11. The assessment was initially completed through an intimation under Section 143(1) of the Act. The reasons for reopening the assessment were based on information from the Deputy Director of Investigation, which referred to certain transactions as suspicious and suggested that income chargeable to tax may have escaped assessment. However, the court found that the reasons recorded for issuing the notice did not show any application of mind or further processing of the information to form a reasonable belief that income had escaped assessment. The reasons relied on the suspicious nature of the transactions but failed to specify the quantum of tax that had escaped assessment, merely stating it would be at least ?1,00,000. The court opined that the reasons did not demonstrate a reasonable belief by the Assessing Officer to issue the notice, leading to the conclusion that the notice was without jurisdiction.

The court granted an interim stay on the impugned notice dated 31st March, 2017, issued under Section 148 of the Act, until the final disposal of the petition. The respondent's counsel waived the service of notice during the proceedings.