2024 (6) TMI 574 - HC - Income Tax

Validity of reopening of assessment - cash deposits receipts by assessee - petitioner argued that all bank transactions had been examined in the scrutiny assessment proceeding - as per DR formation had been received, that money has been brought by M/s Olivia Tradelinks India Pvt. Ltd to the petitioner's bank account - HELD THAT - Vital information was not furnished to the petitioner. By means of a notice issued u/s 148A (b) the only information furnished to the petitioner was with respect to cash deposits received in his bank account from M/s Olivia Tradelinks India Pvt. Ltd. The other receipts with respect to which notice was issued are not disputed by the revenue. To that extent, the explanation furnished by the petitioner has found acceptance. Since, the petitioner was not confronted with the information that he had received cash deposits from M/s Agarwal Bullion, the petitioner was not granted opportunity to rebut the same. Seen in that light, it appears that due compliance of Section 148A has not been made, inasmuch as the notice issued to the petitioner u/s 148A (b) was not complete. In view of the fact that the petitioner has earlier faced scrutiny assessment for the same assessment year, wherein he claims to have disclosed all bank accounts with respect to which reassessment has been drawn, we consider it desirable that appropriate consideration be first made to the material aspects noted above before the fruitful reassessment proceeding may arise to the petitioner. Order u/s 148A (d) set aside - Decided in favour of assessee.

Issues involved: The issues involved in the judgment are the validity of the notice u/s 148A (b) of the Act, the order u/s 148A (d) of the Act, and the notice u/s 148 of the Act dated for A.Y. 2017-18.

Validity of Notice u/s 148A (b) of the Act:
The petitioner disputed any transaction performed by M/s Olivia Tradelinks India Pvt. Ltd. involving deposits of cash in the petitioner's bank account. The petitioner argued that all bank transactions had been examined in the scrutiny assessment proceeding for the A.Y. 2017-18, and no material existed to suggest that any income had escaped assessment. The court observed that the notice issued under Section 148(A)(b) and the order passed under Section 148 (A)(d) of the Act lacked clarity regarding the specific information received by the Revenue Authority.

Compliance with Section 148A of the Act:
The revenue had obtained written instructions indicating that money had been brought by M/s Olivia Tradelinks India Pvt. Ltd to the petitioner's bank account through M/s Agarwal Bullion. However, this vital information was not furnished to the petitioner, depriving them of the opportunity to rebut the claim. The court noted that due compliance of Section 148A of the Act had not been met, as the notice issued to the petitioner was incomplete. The petitioner was not granted a fair opportunity to respond to the specific information regarding cash deposits from M/s Agarwal Bullion.

Setting aside the Order:
Considering that the petitioner had previously undergone scrutiny assessment for the same assessment year and claimed to have disclosed all relevant bank accounts, the court set aside the order dated 27.03.2024. The court directed the petitioner to file further objections to the notice dated 29.02.2024 within two weeks. Subsequently, the appropriate authority was instructed to pass a fresh order under Section 148A (d) of the Act, addressing any further objections raised by the petitioner. The reassessment proceeding was to be conducted accordingly, ensuring that all material aspects were duly considered before proceeding further.

Conclusion:
The court disposed of the writ petition, emphasizing the importance of fair procedures and complete disclosure of relevant information to the petitioner during reassessment proceedings. The judgment highlighted the necessity for proper compliance with statutory provisions and the need for thorough consideration of all material aspects before initiating reassessment proceedings.

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