2022 (3) TMI 1200 - HC - Income Tax

Validity of Reopening of assessment u/s 147 - retraction of the statement - HELD THAT - As noticed that for the purpose of re-opening the assessment in terms of Section 148, the only reason is the statement of the husband of the petitioner which admittedly has been retracted. This court while dealing with similar question has observed under similar circumstances that retraction of the statement had resulted in absence of any material to warrant re-opening of the case against the assessee. As there is no material available on record for initiating the proceedings under Section 148, the impugned order at Annexure-'N' is set aside and consequently the notice at Annexure-'E' is set aside. - Decided in favour of assessee.

Summary

Issues:
1. Writ of certiorari to quash notice under Section 148 of the Income Tax Act, 1961 for the assessment year 2017-18.
2. Writ of certiorari to quash the order rejecting objections and challenging the invocation of Section 147 of the Act.

Analysis:
Issue 1: The petitioner sought a writ of certiorari to quash the notice passed under Section 148 of the Income Tax Act, 1961 dated 31.03.2021 for the assessment year 2017-18. The Senior Counsel for the petitioner argued that the notice was issued to reassess the petitioner's income, and objections were filed regarding the reasons for reopening the proceedings, which were rejected. The Department relied on a statement made by the petitioner's husband declaring a suppression of income, which was later retracted. The court observed that the sole reason for initiating the proceedings was the husband's statement, and as there was no other justification for reopening the assessment, the court set aside the impugned order and notice.

Issue 2: Additionally, the petitioner sought a writ of certiorari to quash the order rejecting objections and challenging the invocation of Section 147 of the Act. The court noted that the husband's retracted statement was the only basis for reopening the assessment, and in similar circumstances, the court had previously observed that the retraction resulted in the absence of material to warrant reopening the case. Consequently, as there was no material available on record for initiating proceedings under Section 148, the court set aside the impugned order and notice, thereby ruling in favor of the petitioner.