2023 (6) TMI 1071 - HC - Income Tax

Validity of reopening of assessment - order passed u/s 148A(d) holding it to be a fit case for issuance of notice u/s 148 - AO as been stated that the earlier notice was set aside by this Court on the ground that mandatory provision of allowing not less than 7 days time to submit reply to the notice u/s 148A(b) was not afforded to her and, accordingly, in the light of the Court s order, the assessee was allowed reasonable time of 15 days to submit her reply to the notice u/s 148A(b) dated 05.07.2022. HELD THAT - Statement referred to in the report of the Investigation Wing was not supplied to the petitioner, despite repeatedly demanded - Here is not a case where the AO did not have any information based on which a notice was issued to the petitioner under Clause (b). It is not in dispute that the copy of the report of the Investigation Wing available to the AO in the form of not on J.M. Balanced Fund- Annual Dividend Option beneficiaries was provided to the petitioner well in advance on 08.08.2022. It is not the petitioner s case that the said information/report was wholly irrelevant for exercise of power u/s 147 of the Act. We reiterate that at the stage of taking decision under Section 148 AO is required to form an opinion based on information available before him, other materials on record and reply of an assessee submitted under Clause (b) of Section 148A of the Act, regarding fitness of a case for issuance of notice under Section 148A. It would have been different matter had there been no information at all or information available with the Assessing Officer were though irrelevant, still the Assessing Officer reached a conclusion that it was a fit case for issuance of notice under Section 148 of the Act. We, accordingly, do not find it a fit case for interference in exercise of writ jurisdiction under Article 226 of the Constitution of India. In any event, the petitioner is at liberty to raise all the aspects which are being raised in the present writ application before proceeding, consequent upon issuance of notice under Section 148 of the Act. Whether there was no prior approval of the specified authority taken under Section 148(d) of the Act and the approval which was taken was under the proviso to Section 148 of the Act and for the said reason also, the impugned order is bad? - On comparative examination of Sections 148 and 148A of the Act, it can be easily culled out that Section 148A lays down the requisite conditions before issuance of a notice under Section 148 of the Act. The proviso to Section 148 restricts the Assessing Officer from issuance of a notice without prior approval of the specified authority. Section 148A lays down a procedure as a condition precedent for issuance of a notice under Section 148. The condition of prior approval of specified authority u/s 148 is satisfied once prior approval of specified authority is granted under Clause (d) of Section 148A of the Act, in our considered opinion. We do not find breach of any mandatory requirement stipulated under Section 148A of the Act which would require this Court s interference at the stage of issuance of notice, in exercise of extraordinary writ jurisdiction under Article 226 of the Constitution of India.

Summary

Issues Involved:
1. Quashing of show cause notice dated 05.07.2022 under Section 148A(b) of the Income Tax Act, 1961.
2. Quashing of order dated 19.08.2022 under Section 148A(d) of the Act.
3. Quashing of notice dated 22.08.2022 under Section 148 of the Act.

Summary:

Issue 1: Quashing of Show Cause Notice Dated 05.07.2022:
The petitioner, an assessee with PAN AYKPS5218E, sought to quash a show cause notice issued under Section 148A(b) of the Income Tax Act for the assessment year 2018-19. The petitioner had filed her return declaring a total income of Rs. 4.12 crores and claimed dividend income of Rs. 4.04 crores as exempt under Section 10(35) of the Act. The Assessing Officer issued a notice based on information from the Investigation Wing suggesting the income had escaped assessment, claiming the dividend was a sham transaction.

Issue 2: Quashing of Order Dated 19.08.2022:
The petitioner argued that the order dated 19.08.2022 under Section 148A(d) was passed without providing all relevant documents, thus violating principles of natural justice. The Assessing Officer had supplied some documents but withheld others, citing confidentiality. The petitioner contended that the Assessing Officer's decision was based on incomplete information and sought the quashing of the order.

Issue 3: Quashing of Notice Dated 22.08.2022:
The petitioner challenged the notice issued under Section 148, arguing that the prior approval of the specified authority required under Section 148A(d) was not obtained. The petitioner also claimed that the approval provided was for issuing a notice under Section 148, not for passing an order under Section 148A(d).

Court's Decision:
The court found that the Assessing Officer had followed the procedural requirements under Section 148A, including obtaining the prior approval of the specified authority. The court held that the petitioner had been given an opportunity to be heard and that the information provided was sufficient for forming an opinion on issuing a notice under Section 148. The court emphasized that the Assessing Officer's decision at this stage was only to determine whether it was a fit case for issuing a notice, not a final determination of escaped income.

The court dismissed the writ application, stating that the petitioner could raise her objections in response to the notice under Section 148 and during subsequent reassessment proceedings. The court found no breach of mandatory requirements under Section 148A and no violation of principles of natural justice.

Conclusion:
The court dismissed the petition, upholding the show cause notice, the order under Section 148A(d), and the notice under Section 148, allowing the petitioner to raise her objections during the reassessment process.