2024 (2) TMI 548 - HC - Income Tax

Validity of reopening of assessment - information relating to the assessed for the A.Y. under consideration is available on record - Validity of two orders u/s 148A(d) contradicting each others, taking reverse stand - non application of mind by sanctioning authority, i.e., PCCIT. HELD THAT - The fact that an earlier order dated 26th July 2022 recommending that it is not a fit case to issue notice under Section 148 of the Act, has been issued, is not denied. There is not even a reference to that earlier order in the order dated 31st July 2022. - In the circumstances, respondents having once held it was not a fit case for issuing notice under Section 148 of the Act, in our view, cannot change that opinion without any basis. This also reflects non application of mind by sanctioning authority, i.e., PCCIT, because if a sanctioning authority has given sanction for issuance of order dated 26th July 2022, we wonder how the sanction for issuing the order dated 31st July 2022 taking a totally contrary stand has been given by the sanctioning authority. This also expresses the total non application of mind by the PCCIT. We should also note that these points had been raised and recorded in this court s order dated 5th September 2022 but still respondents have not bothered to explain in the affidavit in reply. Therefore, petition is allowed. Further, PCIT directed to conduct an inquiry against the said Amit Kumar as to how he has passed two such orders, which contradict each other, in a span of five days and take necessary action. Petition disposed of.

Summary

Issues:
The issues involved in this case are challenging a notice under Section 148A(b) of the Income Tax Act 1961, an order passed under Section 148(A)(d) of the act, and a notice issued under Section 148 of the Act for reopening the assessment for AY-2014-15.

Details of the Judgement:

1. The petitioner challenged the notice, order, and subsequent notice for reopening the assessment. The Respondent initially passed an order dropping the reassessment proceedings, stating that the petitioner had fully disclosed the information in its return of income and that the case was not fit for a notice under the amended provisions of section 148. However, a subsequent order was passed taking a contrary stand without any basis, leading to the petition being allowed to quash the impugned show cause notice and order.

2. The affidavit in reply highlighted the provisions of Section 148 of the Income Tax Act, which require specific conditions to be met for issuing a notice, including information suggesting that income has escaped assessment, which was deemed present in this case. The petitioner's failure to provide supporting documents justified the subsequent notice issued under Section 148.

3. The court noted the contradictory orders passed by the Respondent within a short span, indicating a lack of application of mind by the sanctioning authority. It was directed that an inquiry be conducted against the official responsible for the conflicting orders and necessary action be taken.

4. The court emphasized the importance of maintaining consistency and due diligence in tax assessment proceedings, highlighting the need for proper documentation and adherence to legal requirements to avoid unnecessary disputes and legal challenges.

5. The petition was ultimately disposed of, with the court ruling in favor of the petitioner and directing further action to address the inconsistencies and lapses in the assessment process.