2023 (1) TMI 537 - HC - Income Tax

Reopening of assessment u/s 147 - Section 148A of IT Act kicked in on and from 01.04.2021 vide Finance Act, 2021, a notice u/s 148A(b) was issued - first respondent called upon the writ petitioner-assessee to file objections for the purpose of legal drill under Section 148A(d) - As argued Dissemination Note between the authorities of the Department i.e., inter se department wrongly refers to cash deposits as Rs.169921/- lakhs instead of Rs.1,699.21 lakhs - HELD THAT - The letter of the Additional Commissioner dated 21.07.2022, it is clearly an inter-office communication where the Additional Commissioner has written to the Principal Chief Commissioner of Income Tax, who admittedly is the 'Specified Authority' within the meaning of Section 148A(d) read with Section 151 of IT Act. Therefore, this 21.07.2022 letter is not from the 'Specified Authority' and it is an inter-office mail. The Specified Authority on 30.07.2022 has clearly opined that it is a fit case for issuing notice under Section 148. That puts an end to the argument predicated on the letter dated 21.07.2022 from the Additional Commissioner to the Principal Chief Commissioner of Income Tax. Writ petitioner submitted that once the order is made and once Section 148 legal drill is carried to its logical end, if it goes against the writ petitioner, the writ petitioner will have to make 20% deposit for stay. This Court refrains itself from expressing any opinion on this aspect of the matter as it is premature and as rightly pointed out by learned Revenue counsel, it is in the realm of surmises and conjectures and in any event, this submission does not persuade this Court to interfere at this stage. The argument that post logical end of Section 148 legal drill if the writ petitioner comes to this Court alternate remedy rule will be put against the writ petitioner is going beyond the realm of surmises and conjectures also. It all has to be dealt with on a case to case basis and it is clearly premature to interfere at this stage. This Court is of the considered view that Section 148A is a codified mechanism that has been put in place for the benefit of the assessee and if that is stretched to the levels to which the writ petitioner wants to carry the matter, the very objective of a pre-notice drill qua Section 148 read with section 147 will become counter productive. In the light of the discussion and dispositive reasoning thus far, this Court is not inclined to interfere qua impugned order and impugned notice, both dated 31.07.2022. Before concluding, though obvious it is made clear that Section 148 legal drill shall proceed without being impeded by this order and it will not in any manner serve as impetus either.Sequitur is captioned writ petition fails and the same is dismissed.

Summary

Issues Involved:
1. Assessment under the Income Tax Act, 1961 for the Assessment Year 2014-15.
2. Validity of notice issued under Section 148 of the IT Act.
3. Discrepancy in cash deposit figures leading to reopening of assessment.
4. Interpretation of Section 148A of the IT Act regarding the procedural aspects of assessment.
5. Prematurity of the writ petition challenging the impugned order and notice.

Detailed Analysis:
1. The judgment pertains to a writ petition challenging the assessment under the Income Tax Act for the Assessment Year 2014-15. The petitioner filed a return of income, and subsequently, a notice was issued under Section 148 of the IT Act, alleging that income chargeable to tax had escaped assessment. The petitioner contested the notice primarily due to discrepancies in cash deposit figures mentioned in the communication between tax authorities.

2. The main issue revolved around the validity of the notice issued under Section 148 of the IT Act. The petitioner argued that the discrepancy in cash deposit figures was an error on the part of the tax department, which should not lead to the reopening of the assessment. The petitioner highlighted the difference between the actual cash deposit amount and the amount mentioned in the communication, emphasizing that such errors should not form the basis for reassessment.

3. The judgment also delved into the interpretation of Section 148A of the IT Act, which was introduced to streamline the assessment procedures. The court discussed the applicability of the GKN Driveshafts principle and how Section 148A codified certain principles to govern the reopening of assessments. The court emphasized the procedural aspects involved in reassessment under Section 147, which is controlled by Sections 148 to 153 of the IT Act.

4. Another crucial aspect addressed in the judgment was the prematurity of the writ petition challenging the impugned order and notice. The court considered the arguments presented by both parties regarding the premature nature of the petition and the speculative nature of the challenges raised by the petitioner. The court refrained from interfering at that stage, emphasizing the importance of allowing the assessment process to proceed without hindrance.

5. In conclusion, the court dismissed the writ petition and related applications, stating that the Section 148 legal process should continue without impediment. The judgment highlighted the need to follow the prescribed procedures under the IT Act and refrained from intervening prematurely in the assessment process.