2024 (1) TMI 368 - HC - Income Tax

Reopening of assessment u/s 147 - reasons to believe - notice u/s 148A(b) - whether information disclosed vide notice under Section 148A(b) of the IT Act is not covered by the information specified in Explanation 1(i) of Section 148 of the IT Act? - HELD THAT - The information , on the basis of which, the Assessing Officer can proceed under Section 148A of the IT Act is explained in Explanation 1 and 2 of Section 148 of the IT Act. We are of the view that Section 148A(b) mandates only to supply information to the assessee and not the material, on the basis of which, the Assessing Officer has formed prima facie opinion that any chargeable income to tax has escaped assessment. It is settled that the words used in the provisions of taxing statute are required to be given their plain meaning and nothing can be implied from or read in it. In our opinion the plain reading of Section 148A clearly suggests that the Assessing Officer is required to supply information before issuing notice under Section 148A in the prescribed manner and not the other material on the basis of which it has formed prima facie opinion that income of the assessee chargeable to tax has escaped assessment. In the present case, the Jurisdictional Authority along with notice dated 13.3.2023 under Section 148A(b) of the IT Act has supplied information available with it with the documents such as insight portal, wherein information/description has been given. In the notice dated 13.3.2023 under Section 148A(b) and the order dated 28.3.2023 under Section 148A(d) of the IT Act issued by the Assessing Officer, it is clearly mentioned that in the insight portal, the case of the petitioner is flagged on High Risk CRIU/RU PAN Case for the relevant assessment year. We are of the view that the case of the petitioner is covered by information specified in Explanation 1(i) of Section 148 of the IT Act. It is not the case of the petitioner that information disclosed vide notice under Section 148A(b) of the IT Act is not covered by the information specified in Explanation 1(i) of Section 148 of the IT Act. So far as the judgment of this Court rendered in Micro Marbles Private Limited 2023 (1) TMI 282 - RAJASTHAN HIGH COURT on which, the petitioner has placed reliance is not applicable to the present case as the same was passed while taking into consideration the unamended provisions of Sections 147 148 of the IT Act and there is no discussion about the provisions of Section 148A of the IT Act inserted vide Finance Act w.e.f. 1.4.2021. We respectfully disagree with the judgment of Charu Chains and Jewels Pvt. Ltd. 2023 (1) TMI 486 - DELHI HIGH COURT in view of the above discussion regarding provisions of Section 148A of the IT Act. WP dismissed.

Summary

Issues Involved:
1. Challenge to orders under Section 148A(d) and notices under Section 148 of the Income Tax Act.
2. Alleged contravention of principles of natural justice.
3. Non-supply of material and documents relied upon by the Jurisdictional Authority.
4. Interpretation and application of Sections 147, 148, and 148A of the Income Tax Act.

Summary:

Challenge to Orders and Notices: The petitioners challenged the orders dated 28.3.2023 and 29.3.2023 passed by the Income Tax Officer, Nagaur under Section 148A(d) of the Income Tax Act, 1961, and the consequential notices under Section 148 of the IT Act. The petitioner, a proprietor of M/s Tirumala Enterprises, had declared an income of INR 3,13,390/- for the assessment year 2019-20.

Principles of Natural Justice: The petitioners argued that the impugned orders and notices were in contravention of the principles of natural justice, as the Jurisdictional Authority did not supply complete material and documents relied upon by the respondent-department. They cited the Supreme Court's direction in Union of India vs. Ashish Agarwal, which mandates that the Assessing Officer must submit all information and material relied upon by the Revenue to the assessee.

Non-supply of Material and Documents: The petitioners contended that the Jurisdictional Authority did not provide specific particulars of alleged fake entities, such as their names, invoice numbers, addresses, and GST registration. They emphasized that the Jurisdictional Authority relied heavily on the report of the DDIT/ADIT (Inv.), Udaipur, which was not supplied to them. The Division Bench of this Court in Micro Marbles Private Limited vs. Office of the Income Tax Officer and the Delhi High Court in Charu Chains and Jewels Pvt. Ltd. vs. Assistant Commissioner of Income Tax had held that the material relied upon for initiating proceedings under Section 148 must be supplied to the assessee.

Respondent's Argument: The respondents argued that the information relied upon by the Jurisdictional Authority was supplied to the petitioners, and the impugned orders and notices were passed in accordance with the law. They cited decisions of the Division Benches of this Court in Jugal Kishore Lohiya vs. Principal Chief Commissioner of Income Tax and M/s Chetak Enterprises Ltd. vs. The Assistant Commissioner of Income Tax to support their contention.

Legal Provisions and Interpretation: The court quoted Sections 147, 148, and 148A of the IT Act, emphasizing that the requirement for the Assessing Officer to have "reason to believe" has been replaced by the receipt of information suggesting that income chargeable to tax has escaped assessment. The court held that Section 148A(b) mandates only the supply of information to the assessee, not the material on which the Assessing Officer formed a prima facie opinion. The court found support from judgments of the High Courts of Allahabad and Madhya Pradesh, which held that the Assessing Officer is not obliged to supply material/evidence at the stage of issuing a notice under Section 148A(b).

Conclusion: The court dismissed the writ petitions, holding that the Jurisdictional Authority had complied with the requirements of Section 148A(b) by supplying the necessary information. The petitioners were free to raise their defense before the Jurisdictional Authority in the proceedings under Section 148 of the IT Act.