2023 (3) TMI 1413 - HC - Income Tax

Reopening of assessment u/s 147 - mandation of serving information as contemplated u/s 148A(b) - As argued by assessee providing an opportunity u/s 148A(b) of the Act for the purpose of issuance of notice u/s 148 must be based on an information(which must be tangible information) capable of suggesting that the income chargeable to tax had escaped attention for the relevant financial year - argument on behalf of the Income Tax Department that not only the petitioner was given information as contemplated u/s 148A(b) petitioner had also responded to the same and therefore the challenge set up by the petitioner is untenable - HELD THAT - As conduct of inquiry as contemplated u/s148A(b) is apparently in respect of information/material suggesting that the income chargeable to tax had escaped assessment. The information, as contemplated u/s 148A(a) must contain clear basis cannot be in abstract for the reason that Section 148A(b) of the Act requires notice to be issued under the said section i.e. 148A(b) as to why notice u/s 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment. We find in the present case that only information which was supplied to the petitioner while issuing notice u/s 148A(b) of the Act was that as per the information received from 'other Income Tax authority' the petitioner's capital gain during the previous relevant Assessment Year-2018-19, was not shown properly in the Income Tax Return. The said Annexure with the notice u/s 148A(b) of the Act did not at all disclose as to what information was in fact there with Assessing Officer suggesting that the said capital gain during the Assessment Year-2018-19 was not shown in the ITR. In our view, it was incumbent upon the AO to disclose the nature of information received by it for due compliance of the requisite condition prescribed u/s 148A(b) - The submission that this writ application is premature having been filed against issuance of notice u/s 148 is not acceptable to this Court in the admitted facts and circumstances of this case. The power of re-assessment/re-computation vested in the AP u/s 148 cannot be undertaken lightly or casually as it amounts to reopening of closed transactions. Apparently, with a view to streamline and simplify the procedure of exercise of jurisdiction u/s 147 of the Act; detailed procedure has been laid down under Section 148A of the Act. We do not find substance in the submission made on behalf of the Income Tax Department that in response to the notice issued u/s 148 of the Act, the petitioner can raise the issue of correctness of the notice itself on the ground of non compliance of Section 148A(b) of the Act. AO's decision to issue a notice for re-assessment u/s 148 of the Act attains finality after passing of the order under Section 148A(d) of the Act, which aspect he cannot revisit while exercising his jurisdiction under Section 147 of the Act. Considering the nature of information as furnished to the petitioner with notice under Section 148A(b) of the Act, in our view, the challenge to the notice dated 14.03.2022 is sustainable. Situated thus, the petitioner s challenge to the order dated 31.03.2022 passed under Section 148A(b) of the Act is also sustainable. As a consequence thereof, the notice dated 31.03.2022 issued under Section 148 of the Act cannot be sustained.

Summary

Issues Involved:

1. Compliance with Section 148A of the Income Tax Act.
2. Validity of notice under Section 148 of the Income Tax Act.
3. Prematurity of the writ petition.

Issue-wise Summary:

1. Compliance with Section 148A of the Income Tax Act:
The court examined whether the Assessing Officer (AO) complied with the mandatory requirements under Section 148A before issuing a notice under Section 148. The AO is required to conduct an inquiry, provide an opportunity of being heard, consider the reply of the assessee, and decide on issuing a notice based on the material available. The court found that the information provided to the petitioner was vague and did not meet the statutory requirement of being definite and tangible. The AO failed to disclose the nature of the information received, which was necessary for due compliance with Section 148A(b).

2. Validity of Notice under Section 148 of the Income Tax Act:
The petitioner challenged the notice issued under Section 148 on the grounds of non-compliance with Section 148A. The court noted that the AO's decision to issue a notice for reassessment attains finality after passing an order under Section 148A(d), and this aspect cannot be revisited while exercising jurisdiction under Section 147. The court held that the notice under Section 148 was issued without adhering to the mandatory requirements of Section 148A, rendering it invalid.

3. Prematurity of the Writ Petition:
The Income Tax Department argued that the writ petition was premature, citing the Supreme Court's decision in Commissioner Of Income Tax & Ors vs Chhabil Dass Agarwal, which emphasized that a writ petition should not be entertained if an effective alternative remedy is available. However, the court distinguished this case by highlighting the amendments in the Income Tax Act, which now obligate the AO to strictly adhere to the requirements under Section 148A. The court found that the illegality in issuing the notice was manifest and justified intervention to correct the procedural lapse.

Conclusion:
The court set aside the notice dated 14.03.2022 issued under Section 148A(b), the order dated 31.03.2022 passed under Section 148A(d), and the notice dated 31.03.2022 under Section 148. The matter was remitted back to the AO to consider issuing a fresh notice under Section 148A(b) with clear information as stipulated by law. The application was allowed with no order as to costs.