2022 (11) TMI 248 - HC - Income Tax

Reopening of assessment u/s 147 - Eligibility of reasons to believe - HELD THAT - We are of the view that present is not a fit case to interdict the proceedings at the very threshold. Reasons have been assigned by the assessing officer as to why the explanation given by the petitioner could not be accepted. Certainly, such reasons given have a nexus with the formation of the belief that income chargeable to tax has escaped assessment. It is equally trite that sufficiency or adequacy of reasons cannot be gone into in a proceeding under Article 226 of the Constitution of India. That apart, we are at a stage prior to issuance of notice under Section 148 of the Act. A detailed analysis is neither warranted nor justified. As rightly pointed out in Anshul Jain Vs. Principal Commissioner of Income Tax 2022 (10) TMI 3 - SC ORDER petitioner would have ample opportunities to agitate his contentions during the reassessment proceedings. We see no ground to entertain the writ petition.

Summary

Issues:
Assessment under Section 148A(d) of the Income Tax Act, 1961 for the assessment year 2015-16.

Analysis:
The petitioner, an individual assessee, filed a writ petition under Article 226 challenging the order passed by respondent No.1 under Section 148A(d) of the Income Tax Act, 1961, and the consequential notice issued under Section 148 for the assessment year 2015-16. The petitioner had initially declared a total income of Rs.45,99,150.00 for that year. Subsequently, respondent No.1 initiated re-assessment proceedings based on information indicating that the petitioner had earned profits from trading in equity/derivatives through a specific entity but had not disclosed these profits during the assessment process. The respondent issued a notice under Section 148, leading to the petitioner filing a reply providing details of the profits earned from trading in commodities for the financial year 2014-15. Despite the petitioner's explanations, respondent No.1 passed an order holding that the profits from trading with the specific entity were non-genuine and aimed at tax evasion.

The petitioner contended that the profits from trading were disclosed in the profit and loss statement of his proprietary firm, and the assessing officer should not have disregarded this clarification. On the other hand, the respondent argued that at the stage of passing an order under Section 148A(d), only a prima facie satisfaction was required to decide whether issuing a notice under Section 148 was necessary. The respondent relied on a recent Supreme Court decision to support this stance. After considering the submissions, the Court held that it was not appropriate to interfere with the proceedings at that stage. The Court emphasized that the sufficiency or adequacy of reasons could not be questioned in a writ petition under Article 226, especially when the issuance of the notice under Section 148 had not occurred yet.

The Court noted that a detailed analysis was not warranted at that stage, and the petitioner would have ample opportunities to present his case during the reassessment proceedings. Therefore, the Court dismissed the writ petition, stating that there were no grounds to entertain it. The judgment emphasized that the petitioner could address his contentions during the reassessment process and that the writ petition was accordingly dismissed without costs.