2024 (10) TMI 91 - HC - Income Tax

Validity of notice u/s 148 - reason to believe - AO has for reasons unknown and unfathomable merely observed that the response of the petitioner has not been found to be maintainable - HELD THAT - There has been an abject failure on the part of the AO to either examine or consider the objections that were submitted. AO has for reasons unknown and unfathomable merely observed that the response of the petitioner has not been found to be maintainable. The order u/s 148A(d) as well as the consequential notice u/s 148 of the Act are thus liable to be set aside on this short score alone. We, accordingly, allow the instant writ petition and set aside the order u/s 148A(d) as well as the consequential notice, both dated 10 April 2024.

Summary

Issues:
1. Validity of notice under Section 148 of the Income Tax Act, 1961 for AY 2020-2021.
2. Validity of order under Section 148A(d) of the Income Tax Act, 1961 for AY 2020-2021.
3. Failure of Assessing Officer to consider objections submitted by the petitioner.

Analysis:
1. The writ petition challenged a notice dated 10.04.2024 under Section 148 of the Income Tax Act, 1961 for AY 2020-2021. The petitioner sought the issuance of a Writ, Order, or Directions to set aside the notice. The proposed reassessment was initiated based on a notice dated 26 March 2024 under Section 148A(b) of the Act. The petitioner responded with a detailed reply on 03 April 2024, contesting the assumption of jurisdiction and explaining various entries.

2. The Assessing Officer (AO) passed an order under Section 148A(d) without adequately considering the petitioner's objections. The AO concluded that the petitioner's response was not maintainable, citing discrepancies in income and property sales information. The High Court found the AO's failure to examine or address the objections as a critical flaw. Consequently, the Court set aside the order under Section 148A(d) and the consequential notice issued on 10 April 2024. The matter was remitted to the AO for a fresh examination of the petitioner's reply and to pass a reasoned order. The Court kept all rights and contentions open and allowed the petitioner to request a personal hearing.

3. The Court held that the AO's failure to properly consider the objections submitted by the petitioner rendered the order under Section 148A(d) and the consequential notice invalid. The Court emphasized the importance of the AO examining the petitioner's response thoroughly and passing a reasoned order. By setting aside the order and notice, the Court ensured that the petitioner's contentions would be properly addressed in the reassessment process, maintaining the principles of natural justice and due process.