2023 (5) TMI 1294 - HC - Income Tax

Validity of reassessment proceedings - legality of the impugned order u/s 148A(d) - reopening merely on the basis of remarks potential borrower/lender - as argued AO has relied on some investigation report from the office of the DGIT (Investigation) where some remarks was made as potential borrower/lender and it is the case of the petitioner that impugned proceeding on the basis of the alleged remarks of potential borrower/lender without naming or disclosing anything in detail against the petitioner, is legally not sustainable - HELD THAT - Such allegation of petitioner that the assessing officer has proceeded merely on the basis of remarks potential borrower/lender is not correct since in the later part of the order assessing officer has clarified that on verification of the document the assessing officer has found credible evidence of actual borrowings and not potential in nature. It has also been recorded by AO in the impugned assessment order that it is evident that the assessee has availed cash loan through finance broker from different lenders and it has also been recorded that there is a huge unexplained expenditure within the meaning of Section 69C of the Act and that the cash loan and repayment in cash comes within the crux of provision 269SS and 269T and other relevant provisions of penalty under the aforesaid Act. As find on perusal of the aforesaid impugned order u/s 148A(d) of the Act that the same is based on huge materials and evidence regarding the alleged transaction and that Court in exercise of Constitutional Writ Jurisdiction cannot act as an assessing officer and scrutinize those facts and evidence and substitute the same with its own. Thus aforesaid impugned order is neither a nonspeaking order nor any violation of principles of natural justice nor any procedural irregularity has been committed during the proceeding nor the impugned order has been passed by an officer having inherent lack of jurisdiction which is based on facts and findings and materials evidence. The aforesaid factors should not be ignored. In addition the order under Section 148A(d) of the Act is neither a final assessment order nor any demand arises out of such order and petitioner still will have ample opportunity and scope to make out a case in its favour in proceeding subsequent to the order passed under Section 148A(d) of the Act. This writ petition stands disposed of.

Summary

Issues involved:
The legality of the impugned order under Section 148A(d) of the Income Tax Act, 1961 dated 7th April, 2023 relating to assessment year 2016-17.

Comprehensive Details:

Challenge to Impugned Order:
The petitioner challenged the legality of the impugned order under Section 148A(d) of the Income Tax Act, 1961 dated 7th April, 2023, for assessment year 2016-17. The main allegation was that the assessing officer had relied on an investigation report from the office of the DGIT (Investigation) where remarks were made as "potential borrower/lender" without naming or disclosing details against the petitioner, which the petitioner deemed legally unsustainable.

Assessment Findings:
Upon perusal of the impugned order, it was found that the assessing officer did not solely rely on the remarks "potential borrower/lender." The assessing officer clarified that actual borrowings, not potential, were identified during verification. The assessment order revealed that the assessee had availed a cash loan of Rs. 40,70,00,000 through a finance broker from different lenders, leading to unexplained expenditure falling under relevant provisions of the Income Tax Act.

Legality of Impugned Order:
The High Court determined that the impugned order under Section 148A(d) of the Act was based on substantial materials and evidence regarding the alleged transaction. It emphasized that the court, in its writ jurisdiction, cannot substitute its assessment of facts and evidence. The court noted that the impugned order was not nonspeaking, did not violate principles of natural justice, and was not procedurally irregular. It concluded that the order was based on facts, findings, and material evidence, with no inherent lack of jurisdiction.

Disposition of Writ Petition:
The writ petition challenging the impugned order was disposed of based on the above analysis. The court highlighted that the impugned order was not a final assessment order, and the petitioner still had the opportunity to present its case in subsequent proceedings post the order under Section 148A(d) of the Act.

Additional Directions:
The record indicated that the writ petition was affirmed by a representative on behalf of the petitioner. Further, the petitioner's representative was directed to provide a copy of the PAN card to the respondent's representative. The assessing officer was instructed to inquire about the business activities of the representative and file a report to the Court on the specified date.