2022 (8) TMI 208 - HC - Income Tax

Reopening of assessment u/s 148 - notice under Section 148A(b) of the Act had been issued in the present instance as the Petitioner s ITR and GST Data did not reconcile - HELD THAT - This Court is of the view that the impugned show cause notice as well as the impugned order u/s 148A(d) of the Act are based on distinct and separate grounds. The show cause notice primarily states that it is seen that the Petitioner has made purchases from certain non-filers . However no details or any information of these entities was provided to the Petitioner. It is not understood as to how the Petitioner was to know which of the entities it dealt with were filers or non-filers. The impugned order states that a report was prepared against the Petitioner-company which concludes that the assessee had shown bogus purchases from bogus entities to suppress the profit of the company and reduce the tax liability during the years 2015-16 to 2020-21. However no such report which forms the basis for the information on which the assessment was proposed to be reopened had been provided to the Petitioner. In fact there are no specific allegations in the show cause notice to which the Petitioner could file a reply. Keeping in view the aforesaid the impugned order dated 30th March 2022 passed u/s 148A(d) and notice dated 31st March 2022 issued u/s 148 of the Act are quashed and the Respondents are given liberty to furnish additional materials in support of the allegations made in the show cause notice dated 16th March 2022 within three weeks including reports if any.

Summary

Issues Involved:
Challenge to order under Section 148A(d) of the Income Tax Act, 1961 and related notices for Assessment Year 2018-19.

Analysis:

1. Challenge to Order and Notices:
The petitioner challenged the order dated 30th March, 2022 under Section 148A(d) of the Income Tax Act, 1961, along with the notice dated 31st March, 2022 issued under Section 148 of the Act and a show cause notice dated 16th March, 2022 issued under Section 148A(b) for the Assessment Year 2018-19. The petitioner had initially filed its return of income, which was later picked up for scrutiny, leading to an assessment order. The petitioner contended that the impugned show cause notice did not provide adequate information regarding the alleged escaped income. Respondent No.1 failed to consider that the petitioner had made purchases from GST-registered vendors and claimed input tax credit. The impugned order under Section 148A(d) was based on an alleged report against the petitioner, which was not furnished to them.

2. Court's Observations and Decision:
The court noted that the impugned show cause notice and order were based on separate grounds. The show cause notice accused the petitioner of making purchases from non-filers without providing specific details, making it difficult for the petitioner to respond effectively. The order referenced a report alleging bogus purchases, yet this report was not shared with the petitioner. Consequently, the court quashed the impugned order and notice, giving the respondents three weeks to provide additional materials, including any reports, to support the allegations. The Assessing Officer was directed to decide the matter in accordance with the law after the submission of additional materials. The court disposed of the writ petition and left the rights and contentions of all parties open for further proceedings.