2024 (1) TMI 866 - HC - Income Tax

Reopening of assessment - validity of order passed u/s 148A(d) - case of the appellant is that the respondent assessing authority had failed to consider that information for several assessment years cannot be called for as has been done in the notice issued u/s 148A(b) and no information could be sought for separately for the assessment year 2018-2019 since the appeal is pending before the appellate authority and the re-assessment proceedings in relation to the said year has been challenged by the appellant before this court and by order dated 15.03.2022, the matter stood remanded back to the assessing officer. As contended that the respondent assessing officer did not conduct any independent investigation or enquiry under Section 148A(a) before initiating proceedings by issuance of a notice under Section 148A(b) - AO concluded that the assessee failed to produce any credible evidence to explain the source of cash deposits which had been pointed out in the notice issued and failed to substantiate the same with relevant entries in its books of accounts. HELD THAT - On carefully going through the information which was furnished to the assessee in the form of an annexure to the said notice, it is seen that the assessing officer sought to initiate re-assessment proceedings only for the assessment year 2016-2017. It is no doubt true that the information which was received by the department pertaining to the three financial years have been set out but nonetheless, the re-assessment proceedings which have been proposed to be initiated pertained only to the assessment year 2016-2017. The assessee raised an objection in their reply dated 20.04.2023 stating that notice cannot be issued by clubbing three assessment years. On receipt of the reply, the assessing officer in no uncertain terms has clarified by email dated 20.04.2023 that they were required to submit the details of cash deposits made in a particular bank account in the name of the assessee during the financial year 2015-2016 relevant to the assessment year 2016-2017. The assessee would contend that the assessing officer sought to amend the notice dated 31.03.2023 by issuance of the email which is impermissible under law. The said contention raised by the assessee is devoid of any merits as the information which was furnished to the assessee though contained information pertaining to the three assessment years, the information called for in the notice dated 31.03.2023 pertained only to the assessment year 2016-2017. Thus, the email sent by the assessing officer dated 20.04.2023 cannot be construed to be an amendment of the notice dated 31.03.2023. Accordingly, such contention raised by the assessee is rejected. As noted that the assessee had repeatedly sought for adjournments which would show that the assessee attempted to drag the matter fully knowing well that the assessment will be time barred. The assessing officer was in fact reasonable and accommodated their requests for adjournment on two occasions and granted time till 30.04.2023. It is only after receiving the said information, the assessee sought to give a reply on merits on 29.04.2023 once again reiterating what had been stated earlier. The contentions raised by the assessee have been considered by the assessing officer and a reasoned order has been passed recording all facts and dealing with all the objections raised by the assessee. In terms of Clause (c) of Section 148A, the assessing officer has to consider the reply of the assessee in response to the notice issued under Clause (b). We find from the order dated 07.05.2023 passed under Section 148A(d) of the Act that the assessing officer has considered reply/replies furnished by the assessee in response to the notice issued under Clause (b).In terms of Clause (d), the assessing officer has to decide on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under Section 148 by passing an order with the prior approval of specified authority within the time framed. The stipulation under Clause (d) has been complied with by the assessing officer who has taken a decision, on the basis of the material available on record including the reply/replies given by the assessee and found that the case of the assessee for the assessment year under question namely 2016-2017 is a fit case to issue notice u/s 148 of the Act and prior approval of the specified authority has also been obtained. Thus, the provision of the Section 148A of the Act has been scrupulously followed by the assessing officer and there is no error in the decision-making process of this court to interfere. Thus we find that the challenge to the order passed under Section 148A(d) of the Act has to necessarily fail. Assessee appeal dismissed.

Summary

Issues Involved:
1. Validity of notice under Section 148A(b) of the Income Tax Act, 1961.
2. Whether the re-assessment proceedings could be initiated for multiple assessment years.
3. Requirement of independent enquiry under Section 148A(a).
4. Timeliness and procedural compliance of the re-assessment proceedings.

Summary:

1. Validity of notice under Section 148A(b):
The appellant challenged the notice issued under Section 148A(b) dated 31.03.2023, claiming it was invalid as it called for information for several assessment years and was modified by a subsequent communication. The court found that the notice pertained only to the assessment year 2016-2017 and that the subsequent email merely clarified this, not amending the original notice. The contention raised by the appellant was deemed devoid of merit.

2. Re-assessment proceedings for multiple years:
The appellant argued that the re-assessment notice improperly clubbed multiple assessment years (2016-2017, 2017-2018, and 2018-2019). The court noted that while the information received by the department included multiple years, the re-assessment proceedings were initiated only for the assessment year 2016-2017. The court rejected the appellant's argument, confirming that the proceedings were correctly limited to the specified year.

3. Requirement of independent enquiry under Section 148A(a):
The appellant contended that the notice under Section 148A(b) was issued without conducting an independent enquiry as required by Section 148A(a). The court clarified that conducting an enquiry under Section 148A(a) is discretionary ("if required") and not mandatory. The assessing officer deemed no enquiry was necessary due to the specific nature of the information received. The court upheld this discretion, finding no error in the decision-making process.

4. Timeliness and procedural compliance:
The appellant claimed that the re-assessment proceedings were time-barred and that the assessing officer failed to follow proper procedures. The court observed that the appellant had repeatedly sought adjournments, attempting to delay the process. The assessing officer had reasonably accommodated these requests, but the appellant failed to provide credible evidence for the cash deposits in question. The court confirmed that the assessing officer followed the procedural requirements under Section 148A, including providing an opportunity to be heard and considering the appellant's replies before issuing the notice under Section 148.

Conclusion:
The court dismissed the appeal, affirming the validity of the notice under Section 148A(b) and the subsequent re-assessment proceedings for the assessment year 2016-2017. The court directed the appellant to participate in the re-assessment proceedings without seeking further adjournments, ensuring expeditious completion.