2023 (3) TMI 103 - HC - Income Tax

Reopening of assessment u/s 147 - order of the selfsame u/s 148 A(d) - investigation wing had carried out a search action u/s 132 - HELD THAT - There is no link of the assessee with the entire material, which had been found out during the search action. According to him, the booking had been done for the assessment year 2014-15 and on the strength of the rate card those rates cannot be thrust upon the petitioner when the entire transaction was through the Banking channel. Issue Notice, returnable on 17.01.2023. The assessment process can continue, however, no final assessment order shall be passed. We are expecting the respondent authority to file affidavit-in-reply and also point out a link in this case.

Summary

Issues:
Challenge to notice issued under Section 148 of the Income Tax Act, 1961 for reopening income tax assessment for Assessment Year 2018-19.

Analysis:
The petition was filed under Article 226 of the Constitution of India to challenge a notice issued under Section 148 of the Income Tax Act, 1961, along with the order seeking to reopen the income tax assessment for the Assessment Year 2018-19. The investigation wing conducted a search action under Section 132 of the IT Act in the case of B Safal Group of Ahmedabad, during which certain documents were seized. The petitioner had responded to the show cause notice, highlighting that the booking of the unit was in the assessment year 2014-15, supported by relevant receipts and agreements. The petitioner's counsel argued that there was no link between the petitioner and the material found during the search action. It was emphasized that the transaction was conducted through the banking channel, and the rates from the rate card could not be imposed on the petitioner without proper evidence.

The court heard the arguments presented by the petitioner's senior advocate and advocate, directing the respondent authority to file an affidavit-in-reply and establish a link in the case. A notice was issued, returnable on a specified date, allowing the assessment process to continue but prohibiting the passing of a final assessment order until further proceedings. Additionally, the court permitted direct service through e-mode on the official email address, in addition to the regular mode of service. The judgment focused on the lack of evidence linking the petitioner to the material seized during the search action, emphasizing the importance of establishing a clear connection before proceeding with the assessment.