2023 (8) TMI 968 - HC - Income Tax

Validity of reopening of assessment - denial of reasonable opportunity of being heard due to non-supply of documentary evidence/material in support of the notice u/s. 148A(b) - HELD THAT - As this issue is already been adjudicated and decided by this Court in a recent decision in M/s Amrit Homes Private Ltd. 2023 (8) TMI 683 - MADHYA PRADESH HIGH COURT as held object behind insertion of Section 148A by the Legislature w.e.f. 01.04.2021 inter alia is to prevent rampant and casual issuance of notice u/s. 148 by the Revenue;to save unnecessary harassment to the assessee of being subjected to re-opening a case under Section 148 and to save the Revenue of the time and energy which may be vested pursuing frivolous and fruitless proceedings u/s 148. No live and proximate link between information received by Assessing Officer and formation of belief that income chargeable to tax has escaped assessment - As seen from the notice issued u/s. 148A(b) (Annexure P/2) dated 03.03.2023 that the same is accompanied by Annexure containing details of facts, figures and reasons, which are said to be the foundation of the AO forming opinion that income chargeable to tax escaped assessment qua the assessment year 2019-20. On the aforesaid detail of information furnished to the petitioner along with the said notice u/s. 148A(b), it appears that the same is sufficient and adequate to afford reasonable opportunity to petitioner to prepare and submit an effective response. Thus, it does not appear that the notice u/s. 148A(b) is wanting in material in particular.

Summary

Issues Involved:
The judgment involves challenges to notices issued under the Income Tax Act, 1961, specifically under sections 148A(b) and 148A(d), regarding the escapement of income assessment for the assessment year 2019-20. The main issues revolve around the failure of the Revenue to follow due process of law before issuing the notices and orders.

Writ Petition No. 8854 of 2023:
The petitioner, a partnership firm, received a notice under section 148A(b) of the Income Tax Act on 03.03.2023, based on information related to GST Invoice Fraudsters. The notice detailed reasons for the Assessing Officer to believe that certain income had escaped assessment. The petitioner was found to have engaged in transactions with a non-existent entity, resulting in the artificial inflation of purchase expenses and reduction of taxable income. Despite seeking time for collection of documents and submitting replies, the subsequent order under section 148A(d) was passed on 17.03.2023, followed by a notice under section 148 proposing reassessment of the escaped income.

Writ Petition No. 8990 of 2023:
This petition also challenges a notice issued under section 148A(b) on 03.03.2023, along with subsequent orders and notices regarding the escapement of income assessment for the assessment year 2019-20. The petitioner raised concerns about the Revenue's failure to adhere to due process of law before issuing the notices and orders.

Adjudication:
The Court heard arguments from both parties and considered the grounds raised by the petitioner. The petitioner primarily challenged the lack of a reasonable opportunity to be heard due to non-supply of relevant material and the absence of a direct link between the information received by the Assessing Officer and the belief that income had escaped assessment.

Court's Decision:
Regarding the first ground, the Court referred to a previous decision highlighting the objectives behind Section 148A, emphasizing the need to prevent casual issuance of notices by the Revenue and to protect the assessee from unnecessary harassment. The Court found that the information provided to the petitioner was sufficient to prepare an effective response, thus dismissing the challenge on this ground.

Conclusion:
The Court declined to interfere and dismissed both writ petitions, allowing the petitioners and the Revenue to pursue remedies available under section 148 of the Income Tax Act in accordance with the law.