2022 (12) TMI 1166 - HC - Income Tax

Reopening of assessment u/s 147 - procedure followed for reassessment under Section 147 after newly inserted Section 148A - HELD THAT - This is a case of proposed reassessment. In view of the newly inserted Section 148A in the Act, there has been a paradigm shift in the procedure followed for reassessment under Section 147 of the Act. Prior to issuance of notice under Section 148 of the Act, a notice under Section 148A(b) of the Act is required to be issued enabling the person concerned to submit reply, whereafter the assessing authority upon receipt of approval from the specified authority is mandated to pass an order under Section 148A(d) of the Act, whether the case is fit for reopening or not. Once it is decided that it is a case fit for reopening, consequential notice under Section 148 of the Act is issued. Thus the order under Section 148A(d) of the Act is at a stage prior to issuance of notice under Section 148 of the Act. Unless glaring omissions are demonstrated or the conditions precedent for exercise of the power to reopen assessment are not complied with, a writ Court would not ordinarily interfere with an order passed under Section 148A(d) of the Act inasmuch as the proceedings is at a very nascent stage even prior to issuance of the statutory notice under Section 148 of the Act. We are of the view that contentions raised by the petitioner can very well be raised in the reply to the notice issued under Section 148 of the Act. At this stage, preempting the authorities from proceeding further on the grounds urged in the writ petition would not be proper. We, therefore, decline to interfere in the matter.

Summary

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

Analysis:
The petitioner filed a petition under Article 226 seeking to quash the order passed by respondent No.1 under Section 148A(d) of the Income Tax Act, 1961 for the assessment year 2015-16. The petitioner, an assessee under the Act, received a notice suggesting that income chargeable to tax had escaped assessment for the said year. The petitioner's reply was not accepted, and the impugned order was passed stating it was fit for reopening under Section 148 of the Act. The petitioner argued that respondent No.1 exceeded the scope of the notice by delving into the turnover and failed to inform about certain queries beforehand.

The petitioner's counsel highlighted Section 151A of the Act, which deals with faceless assessment, emphasizing that the impugned order was passed in a physical manner contrary to the automated allocation system specified in the notification dated 29.03.2022 by the Central Board of Direct Taxes. The Standing Counsel for the Income Tax Department contended that the petition was premature as the notice under Section 148 of the Act had not been issued yet, and the petitioner would have opportunities during reassessment proceedings and subsequent remedies if needed.

The Court noted the procedural changes introduced by Section 148A in the Act for reassessment, requiring a preliminary notice under Section 148A(b) before the issuance of a reopening order under Section 148A(d). The Court emphasized that interference at such an early stage is unwarranted unless there are glaring omissions or non-compliance with prerequisites for reopening assessment. It was held that the petitioner's contentions could be addressed during the reply to the notice under Section 148, and preempting authorities at this stage would not be appropriate. Consequently, the Court declined to interfere and dismissed the writ petition without costs.

In conclusion, the Court's decision was based on the procedural requirements under Section 148A of the Act, emphasizing the need for adherence to statutory procedures and allowing authorities to proceed with the reassessment process without premature interference from the Court.