2022 (5) TMI 1069 - HC - Income Tax

Reopening of assessment u/s 147 - Validity of Order passed u/s 148A(d) and the notice issued u/s 148 - HELD THAT - This Court is of the view that even if the re-assessment was being done for verification in accordance with Explanation 1 to Section 148, nothing prevented the AO from conducting an enquiry with respect to the said information in accordance with Section 148A(a) - In any event, it was all the more necessary in the present case for the AO to thoroughly scrutinise the contentions and submissions advanced by the petitioner-assessee before passing an order under Section 148A(d) of the Act. In the present case, the petitioner has placed on record an acknowledgement of the reply dated 4th April, 2022 received by him from the e-filing Portal of the Income Tax Department. The said acknowledgment bears the number 579354131040422. From the said acknowledgment number it is apparent that the petitioner had filed its reply on 4th April, 2022. Since the impugned order under Section 148A(d) has been passed on 5th April, 2022 i.e. after receipt of the detailed reply of the petitioner dated 4th April, 2022, the Assessing Officer should have considered the same as it was available on record. By not considering the reply of the petitioner dated 4th April, 2022, the mandate of Section 148A(c) has been violated as it casts a duty on the Assessing Officer, by using the expression shall to consider the reply of the petitioner/assessee in response to the notice under Section 148A(b) before making an order under Section 148A(d). This Court in Fena Pvt. Ltd. 2022 (5) TMI 892 - DELHI HIGH COURT had quashed the order passed under Section 148A(d) of the Act in similar circumstances i.e. where Assessing Officer had not taken into consideration the replies along with the documents/evidences filed by the assessee before passing the order under Section 148A(d) of the Act. The impugned order under Section 148A(d) and the notice issued under Section 148 are quashed and set aside. - Decided in favour of assessee.

Summary

Issues:
Challenge to order under Section 148A(d) and notice issued under Section 148 of the Income Tax Act, 1961.

Analysis:
1. The petitioner challenged the order passed under Section 148A(d) and the notice issued under Section 148 of the Income Tax Act, 1961, dated 5th April, 2022. The petitioner contended that the impugned order violated principles of natural justice and statutory provisions. The reply furnished by the petitioner on 4th April, 2022, was not considered, leading to an adverse inference against the petitioner. The petitioner argued that the Show Cause Notice issued on 27th March, 2022, for verification purposes, was in violation of the Act.

2. The respondent's counsel presented an email from the jurisdictional Assessing officer, indicating that the petitioner had submitted a reply on the Income Tax Portal on 4th April, 2022, along with necessary supporting evidence. The Assessing Officer had raised tickets on the ITBA Helpdesk to address the timing of the petitioner's reply. The respondent argued that Section 148A allows for an inquiry, giving the Assessing Officer the authority to issue notices for verification of transactions to determine if income has escaped assessment.

3. The Court observed that even if reassessment was for verification, the Assessing Officer should have conducted an inquiry as per Section 148A(a) to scrutinize the petitioner's contentions before passing an order under Section 148A(d). The petitioner had filed a reply on 4th April, 2022, which was acknowledged by the Income Tax Department's e-filing Portal. The Court found that the Assessing Officer should have considered this reply before passing the order on 5th April, 2022, as mandated by Section 148A(c).

4. Referring to a previous case, the Court highlighted that orders passed under Section 148A(d) were quashed in similar circumstances where the Assessing Officer had not considered the replies and evidence filed by the assessee. Consequently, the Court quashed the impugned order under Section 148A(d) and the notice issued under Section 148 of the Act, both dated 5th April, 2022. The matter was remanded back to the Assessing Officer to pass a reasoned order within eight weeks after considering the petitioner's reply dated 4th April, 2022.