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2022 (9) TMI 658 - HC - Income TaxReopening of assessment u/s 147 - reliance on material obtained in the course of a search or a survey - as argued notice had been issued after 01.04.2021 though relating to an assessment year prior to 01.04.2021, requiring adherence to the new scheme of re-assessment u/s 148A - Whether condition set out under Section 149(1)(b) satisfied ? - HELD THAT - Challenge to jurisdiction in this case cannot be sustained. As regards the first objection, the Central Board of Direct Taxes (CBDT) has issued two Circulars, one dated 10.12.2021 and the second dated 13.12.2021 that deal with the e-Verification Scheme, 2021 as well as provides information on the implementation of Risk Management Strategy. On a combined reading of the above two Circulars, there can be no fetters placed on the powers of an Assessing Authority to gather information on the basis of which proceedings for reassessment may be initiated. In fact, in the celebrated case of Pooran Mal Vs the Director of Inspection (Investigation), New Delhi and Ors . 1973 (12) TMI 2 - SUPREME COURT the Hon'ble Supreme Court has affirmed the position that material obtained in the course of a search or a survey that might itself not confirm to the parameters of a legally conducted search, would still qualify as information that may be used by an Authority in the course of assessment. No doubt, the provisions of Section 148A does not contain such an expanded description of the sources that remain limited to those mentioned therein, including Foreign Tax and Tax Research (FT TR) references. In addition, the Department has set up a specific post designated as Director of Income Tax (Investigation and Criminal Intelligence), with a team of officers, to probe and locate instances of evasion of tax/avoidance of tax for appropriate action. We find no merit in the submission of the petitioner to the effect that the information available with the officer is vague, non-specific or does not relate to the Risk Management Strategy of the Department. The term 'Risk Management Strategy' is merely a phrase connoting an evolving strategy developed by the Income Tax Department to address and cover all resources from where information may be collated and there must be no limitation placed on one s understanding of this concept. In fact, the officer has, in the reasons, clearly referred to information received from the Director of Income Tax (Investigation and Criminal Intelligence) and for the purposes of Section 148A, this would suffice. A perusal of the reasons indicates that, prima facie, the condition set out under Section 149(1)(b) is satisfied insofar as the income chargeable to tax that is represented in the form of the movable property transferred by the petitioner far in excess of the required amount of Rs.50,00,000/-. Grant of sanction in terms of Section 151 - petitioner submits that there has been no sanction accorded as statutorily required. However, upon a perusal of the impugned notice u/s148 we find that sanction has been duly obtained from the Principal Commissioner of Income Tax/R2 and thus, this argument fails. No infirmity is pointed out in the sanction as accorded. Thus the challenge to the re-assessment proceedings is rejected. The re-assessment will now proceed on the merits of the matter, in accordance with law.
Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961. 2. Compliance with the new scheme of re-assessment under Section 148A. 3. Adequacy of information provided for re-assessment. 4. Satisfaction of conditions under Section 149(1)(b) for re-assessment beyond three years. 5. Grant of sanction under Section 151 of the Act. Detailed Analysis: 1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961: The petitioner challenged the re-assessment proceedings for the assessment year 2016-2017, arguing that the notice dated 01.04.2021 under Section 148 was issued after 01.04.2021 and thus should adhere to the new scheme of re-assessment under Section 148A. The initial notice was quashed by the High Court. However, the Supreme Court, in Union of India Vs Ashish Agarwal, validated such notices, treating them as issued under the new regime of re-assessment. Consequently, the Income Tax Department issued a fresh notice to the petitioner on 07.07.2022 under Section 148A(b). 2. Compliance with the new scheme of re-assessment under Section 148A: The petitioner argued that the information required under Section 148A was not provided appropriately. The court referenced CBDT Circulars dated 10.12.2021 and 13.12.2021, which detailed the sources of information for re-assessment, including government agencies, internal audit objections, and information from income tax authorities. The court concluded that the Assessing Authority has broad powers to gather information for re-assessment, and the information provided in this case sufficed. 3. Adequacy of information provided for re-assessment: The petitioner contended that the information did not relate to the Risk Management Strategy or Audit Objection as required. However, the court noted that the term 'Risk Management Strategy' is an evolving concept encompassing various sources of information. The information received from the Director of Income Tax (Investigation and Criminal Intelligence) was deemed sufficient for the purposes of Section 148A. 4. Satisfaction of conditions under Section 149(1)(b) for re-assessment beyond three years: The petitioner argued that the conditions under Section 149(1)(b) were not met, specifically that the income alleged to have escaped assessment did not amount to Rs.50,00,000/- or more. The court found that the income chargeable to tax, represented in the form of immovable property transferred by the petitioner, was Rs.1,50,25,585/-, which exceeded the required threshold. 5. Grant of sanction under Section 151 of the Act: The petitioner claimed that the required sanction for re-assessment was not obtained. The court reviewed the impugned notice under Section 148 dated 30.07.2022 and confirmed that the sanction was duly obtained from the Principal Commissioner of Income Tax, thus rejecting this argument. Conclusion: The court dismissed the petition, rejecting the challenge to the re-assessment proceedings. The re-assessment will proceed on its merits in accordance with the law. No costs were awarded, and connected miscellaneous petitions were closed.
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