2023 (1) TMI 722 - HC - Income Tax

Reopening of assessment u/s 147 - re-assessment were initiated pursuant to a Tax Evasion Petition (TEP) uploaded by one of the Income Tax officials on the portal of the Assessing Officer - As argued all material as available with the Assessing Officer as Information was not provided to the petitioner - respondent, has handed over several documents including the ledger accounts, which were available with the AO as Information for initiating the re-assessment proceedings, Concededly, the said documents were not provided to the petitioner and the petitioner had no occasion to respond to the same. HELD THAT - This Court is of the view that it would be apposite to set aside the impugned notice and the impugned order and to direct the AO to reconsider the matter after affording the petitioner to respond to the material relied upon by the Assessing Officer. This Court directs as under (i) The Assessing Officer shall provide all documents considered by him as Information for initiating the re-assessment proceedings to the petitioner within a period of two weeks from today. (ii) The petitioner is given an opportunity to respond to the same within a period of one week thereafter. (iii) The Assessing Officer shall pass such order as it considers fit on receipt of the response of the petitioner, within a period of four weeks thereafter. This Court has not expressed any opinion as to the merits of the petitioner s contention that income chargeable to tax had not escaped assessment and nothing stated in this order should be construed as such.

Summary

Issues:
1. Impugning an order and notice under Section 148A(d) of the Income Tax Act, 1961.
2. Interpretation of Section 148 of the Act.
3. Allegations regarding undisclosed income and cash receipts.
4. Adequacy of information provided to the petitioner for re-assessment proceedings.

Analysis:
1. The petitioner challenged an order and notice under Section 148A(d) of the Income Tax Act, 1961, related to re-assessment for the Assessment Year 2016-17. The initiation of re-assessment proceedings stemmed from the sale of a property by the petitioner to a company, where certain financial transactions were alleged to have been undisclosed, leading to income escaping assessment.

2. The petitioner's counsel raised contentions regarding the interpretation of Section 148 of the Act but later focused the challenge on the inadequacy of information provided by the Assessing Officer. The petitioner claimed that all relevant material considered as 'Information' by the Assessing Officer was not shared, limiting the petitioner's ability to respond effectively.

3. Specific allegations were made concerning the undisclosed income from the property sale, including the receipt of a substantial amount in cash. The petitioner contended that the cash receipt was not linked to him and that the capital gains from the property sale were disclosed in the returns of a Hindu Undivided Family (HUF) to which he belonged.

4. The High Court, after considering the arguments, directed the Assessing Officer to provide all documents considered as 'Information' for re-assessment to the petitioner within two weeks. The petitioner was granted one week to respond, following which the Assessing Officer was instructed to pass an appropriate order within four weeks. The Court clarified that its directions did not indicate any opinion on the merits of the petitioner's contentions regarding the alleged income escaping assessment.

This detailed analysis of the judgment highlights the key issues involved, the arguments presented, and the ultimate direction given by the High Court to address the concerns raised by the petitioner regarding the re-assessment proceedings under the Income Tax Act.