2023 (4) TMI 1383 - HC - Income Tax

Reopening of assessment u/s 147 - petitioner had not filed the return for the relevant year - HELD THAT - The notice issued u/s 148A(b) of the Act proceeded on a completely incorrect premise i.e. that the petitioner was a non-filer. In support of the plea that the petitioner had filed its Income Tax Return (ITR) our attention was drawn. Second the information concerning the salary received by the petitioner as also the sale of property was disclosed in the ITR. It was emphasised that in respect of his ITR the petitioner received intimation on 20.10.2016 u/s 143(1) of the Act. Third the email said to have been received from the buyer of the subject property had not been shared with the petitioner. In defence of the impugned action has relied upon the order passed under Section 148A(d) of the Act. As is evident from order passed u/s 148A(d) of the Act which has been extracted hereinabove the AO has not mentioned the date of the email. As indicated hereinabove the AO had noted in order passed u/s 148A(d) of the Act that the email is indicative of the fact that the petitioner has received at least Rs. 1 crore. We are unable to appreciate what has been noted in paragraph concerning the amount said to have been received by the petitioner. The email would have either indicated an amount or none at all; the use of the expression at least is not understood by us. Therefore according to us the best way forward would be to set aside the impugned notices and order. As understanding of the relevant provisions of the Act is that since the instant case concerns AY 2016-17 and the limitation under the old regime had not expired as on 01.04.2021 the limitation stands extended. AO proceeds on the basis that the limitation was expiring on 31.03.2023. Thus for the foregoing reasons the impugned notices and the order are set aside.

Summary

Issues:
Challenge to notice under Section 148A(b) of the Income Tax Act, 1961; Challenge to order under Section 148A(d) and consequential notice for Assessment Year 2016-17.

Analysis:
The High Court addressed a writ petition challenging a notice under Section 148A(b) of the Income Tax Act, 1961, and an order under Section 148A(d) along with a consequential notice for Assessment Year 2016-17. The Assessing Officer (AO) issued the initial notice based on the premise that the petitioner had not filed the return for the relevant year. The petitioner responded seeking more time due to health issues and ongoing litigation. Subsequently, the AO issued a fresh notice with a shorter deadline. The AO passed an order under Section 148A(d) noting that the petitioner had indeed filed the return but raised new issues not mentioned in the initial notice, involving undisclosed income from a property sale. The petitioner argued that the initial notice was based on incorrect information as the return had been filed and income details were disclosed. The Court found discrepancies in the AO's actions and the lack of clarity in the information provided, leading to the setting aside of the notices and order.

The Court noted that the AO's possession of an email regarding the property sale was not mentioned in the initial notice, raising questions about transparency and procedural fairness. The Court expressed confusion over the AO's use of the term "at least" regarding the undisclosed income, emphasizing the need for clarity and precision in such matters. The Court ultimately decided to set aside the impugned notices and order due to the lack of proper communication and procedural irregularities.

Regarding the limitation period, the Court clarified the understanding of the relevant provisions of the Act, highlighting discrepancies in the AO's calculation of the limitation period. The Court granted liberty to the AO to take further legal steps but emphasized the importance of providing all relevant information, particularly the email from the property buyer, if reassessment proceedings were to be recommenced. The writ petition was disposed of with parties instructed to act based on the digitally signed copy of the order.