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2023 (12) TMI 1362 - HC - Income TaxValidity of reassessment beyond period of limitation - notice issued under Section 148 mentioned only the period of 30 days instead of 90 days as per the provisions u/s 148 - HELD THAT - As considering the provisions of Sections 148, 148A and 149, the notice u/s 148A(b) shall not be invalid and on that ground, the reassessment proceedings cannot be quashed and set aside. In the case of Naveen Verma 2011 (2) TMI 248 - PUNJAB AND HARYANA HIGH COURT in the facts of the case before it, upon issuance of notice u/s 158BD by the AO giving lesser period of 15 days for filing return, notice is duly served, the assessee can either avail of the statutory time for filing of the return irrespective of shorter period mentioned in the notice or can be given fresh opportunity if it is held that the assessee suffered prejudice on account of shorter period mentioned in the notice. Therefore, not permissible to quash the impugned notice merely on the ground that the period specified u/s 148 when the notice was issued, more particularly, when such notice would relate back to the assessment period, the time period provided for filing return was admittedly for 30 days, admittedly, such period, as may be specified in such notice. Therefore, the period of 30 days mentioned in the notice u/s 148 cannot be said to be fatal to the assumption of the jurisdiction by the AO in the facts of the case. Therefore, this contention raised on behalf of the petitioner is rejected. Assumption of jurisdiction by the AO while issuance of notice u/s 148A(b) - As notice dated 28th March 2023 along with the Annexures issued under Section 148A(b) of the Act cannot be said to be the notice requiring the assessee to provide an opportunity of hearing to show cause as to why the notice under Section 148 of the Act should not be issued on the basis of the information which suggests that the income chargeable is escaped assessment. The notice is only in the nature of inquiry as contemplated under Section 148A(a) of the Act, which provides that before issuance of any notice under Section 148 of the Act, the Assessing Officer shall conduct an inquiry, if required, with prior approval of the specified authority with respect to the information which states that the income chargeable is escaped assessment. Therefore, though the notice was issued under the provisions of Section 148A(b) of the Act, in fact, such notice is u/s 148A(a) of the Act as the ingredients of notice which requires as per the statutory provisions of Section 148A(b) are not mentioned. AO has not provided any details with regard to income which has escaped assessment, but has called for the details for the period from the Financial Year 2014-15 to 2015-16 without mentioning the income as escaped assessment for the relevant Assessment Year 2016-17. AO for the first time, in the order passed under Section 148A(d) of the Act has mentioned about bifurcation of the total transaction of Rs. 791.22 Crores out of which credit entries amounting to Rs. 86,63,62,755/- was mentioned pertaining to the period from 1st April 2015 to 27th April 2015 in the Suspicious Transaction Report. On perusal of the impugned order u/s 148A(d) AO did not consider any of the contentions raised on behalf of the assessee on merits and reiterated only extract from the Suspicious Transaction Report - assessee has been given the entire details of transaction in reply along with the annexures, however, the AO did not consider the same and only observed that the assessee did not adduce any supporting document establishing the identity of the parties, genuineness of transaction and creditworthiness of the counter parties justifying the bank account transactions carried out are related to the business parties of the assessee. On perusal of the record, it appears that the petitioner assessee has submitted all the details along with reply filed on 9th May 2023 in such circumstances, in view of the above facts, the impugned assessment order u/s 148A(d) of the Act is not sustainable as the AO has failed to set out any opinion on the basis of the available information and material on record to arrive at the finding that it is a fit case to reopen the assessment under Clause (b) of Section 148A - In the case on hand, we are not required to examine the correctness of the contentions qua the facts of the case as raised on behalf of the petitioner as it would be premature as the case of the petitioner is based upon the legal contentions that the notice u/s 148A(b) is in the nature of notice u/s 148A(a) and that the notice issued u/s 148A(b) is without considering the contentions raised by the assessee in the reply to the notice under Section 148A(b) as per Clause (c) of Section 148A - On perusal of the notice under Section 148A(b) of the Act, it is clearly seen that the annexures do not contain any information, it is a questionnaire requiring the petitioner to provide details as sought for and therefore, it was an intention of the Assessing Officer who was to conduct an inquiry after receiving information from the assessee and therefore, notice is deemed to be the notice under Section 148A(a) of the Act. Thus, there is a gross procedural error from the very inception of the procedure rendering the same is bad in law. 39 For the reasons recorded as above, as the notice dated 28th March 2023, though stated to be issued under Clause (b) of Section 148A of the Act, the same is, in fact, a notice under Clause (a) of Section 148A of the Act can be treated as such. As the time to issue notice under Section 148A(b) of the Act has already expired, no purpose would be served by issuing direction to the AO to conduct an inquiry considering the reply of the assessee as to whether to issue notice under Section 148A(b) of the Act or not. The impugned order passed u/s 148A(d) as well as the notice issued under Section 148 of the Act are hereby quashed and set aside.
Issues Involved:
1. Validity of the notice period under Section 148 of the Income Tax Act. 2. Proper assumption of jurisdiction by the Assessing Officer under Sections 148A(b) and 148A(d) of the Income Tax Act. 3. Procedural compliance and adequacy of the inquiry conducted under Section 148A(a) of the Income Tax Act. Detailed Analysis: 1. Validity of the Notice Period under Section 148: The primary issue was whether the notice issued under Section 148 of the Income Tax Act, which provided a 30-day period for filing a return, was valid, given the statutory amendment effective from April 1, 2023, requiring a minimum period of 90 days. The petitioner argued that the notice was invalid due to non-compliance with the amended provision. However, the court noted that the proceedings were initiated before the amendment took effect, with the notice under Section 148A(b) issued on March 28, 2023. Therefore, the subsequent notice under Section 148 dated May 16, 2023, related back to the initiation of the reassessment proceedings, thus rendering the 30-day period valid. The court relied on precedents indicating that procedural defects do not necessarily vitiate proceedings unless prejudice is shown. Hence, this contention was rejected. 2. Assumption of Jurisdiction by the Assessing Officer: The petitioner challenged the jurisdiction assumed by the Assessing Officer, arguing that the notice under Section 148A(b) was, in essence, a notice under Section 148A(a), as it sought information rather than providing an opportunity to contest the reopening of assessment. The court found that the notice was indeed in the nature of an inquiry, lacking specific allegations of income escaping assessment. The Assessing Officer failed to provide details of the alleged income that had escaped assessment, which is a prerequisite for a valid notice under Section 148A(b). The court concluded that the procedural error from the inception rendered the notice and subsequent proceedings invalid. 3. Procedural Compliance and Inquiry under Section 148A(a): The court examined whether the Assessing Officer conducted a proper inquiry under Section 148A(a) before issuing the notice under Section 148A(b). It was observed that the notice primarily sought information and did not set out a prima facie case of income escaping assessment. The Assessing Officer's failure to consider the detailed reply submitted by the petitioner further highlighted the inadequacy of the inquiry. The court emphasized that the procedural lapse, particularly the failure to comply with the statutory requirements of Section 148A(b), invalidated the proceedings. Conclusion: The court held that the procedural errors and the failure to comply with statutory requirements rendered the notice and subsequent orders invalid. The impugned order under Section 148A(d) and the notice under Section 148 were quashed. The court clarified that since the time to issue a valid notice under Section 148A(b) had expired, no further inquiry could be directed. The petition was allowed, setting aside the contested notices and orders.
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