2022 (6) TMI 32 - HC - Income Tax

Reopening of assessment - notice u/s 148A on the basis of information available i.e. 'purchase of immovable property more than 20,00,000/-' - Need to file personal affidavits - HELD THAT - As from the facts as mentioned in our order 2022 (5) TMI 1390 - ALLAHABAD HIGH COURT of the personal affidavit of the respondent No.2 afore-quoted, it is clear that the impugned order passed by the respondent No.3 was patently erroneous and grossly illegal, which also reflects abuse of power by the concerned officers. Government of India, Ministry of Finance, Department of Revenue, Central Board of Direct Taxes has issued instructions/ Circular F.No.225/101/2021-ITA-II on 23.04.2022, which was followed by a personal affidavit of the Revenue Secretary on behalf of Union of India. As prima facie, the impugned order dated 31.03.2022 under Section 148A(d) passed by the respondent No.3 appears to attract the aforesaid circular and required action as per personal affidavit on behalf of the Union of India. Therefore, we direct the respondent No.1 to ensure that appropriate proceeding in accordance with law is initiated against the erring officers. Considering the facts and circumstances of the case and the statement made by the respondent No.2 in paragraph-7 of the personal affidavit, the impugned order under Section 148A(d) of the Income Tax Act, 1961 for the Assessment Year 2018-19 passed by the respondent No.3 and the impugned notice under Section 148 are hereby quashed. The writ petition is allowed.

Summary

Issues involved:
1. Validity of the impugned order dated 31.03.2022 passed by the assessing authority for the Assessment Year 2018-19 under Section 148A(d).
2. Legality of the notice under Section 148 dated 31.03.2022.

Analysis:

Issue 1: Validity of the impugned order dated 31.03.2022
The petitioner challenged the order passed under Clause (d) of Section 148A of the Income Tax Act, 1961, alleging arbitrariness and illegality. The petitioner had explained the transaction in question with documentary evidence, yet the assessing authority proceeded to pass the impugned order based on extraneous grounds not part of the original notice. The Court noted that the Assessing Officer must conduct an inquiry, afford the assessee a hearing, and decide on issuing a notice under Section 148 based on the information available. In this case, the order was deemed to be passed without due consideration of the petitioner's explanation, leading to the quashing of the order.

Issue 2: Legality of the notice under Section 148 dated 31.03.2022
The impugned notice under Section 148 was issued based on information regarding the purchase of immovable property over a certain value. The petitioner responded with a detailed explanation and provided documentary evidence to support the transaction. Despite this, the assessing authority proceeded to issue the notice under Clause (d) of Section 148A without proper consideration of the petitioner's submissions. The Court emphasized the importance of following due process as outlined in Section 148A, which includes conducting an inquiry, providing the assessee an opportunity to be heard, and making a decision based on the information available. The Court found the notice to be erroneous and illegal, reflecting an abuse of power by the concerned officers.

In conclusion, the High Court quashed the impugned order dated 31.03.2022 and the notice under Section 148 dated 31.03.2022. Additionally, directions were given to ensure appropriate action against the erring officers in accordance with the law. The respondent was instructed to communicate the action taken to the petitioner and submit a compliance report to the Court within a specified timeline.