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2023 (1) TMI 724 - HC - Income TaxReopening of assessment u/s 147 - Validity of notice issued u/s 148 and 148A(b) - petitioner had entered into transactions with Kisna Traders Pvt Ltd in the relevant period through a broker going by the name Varun Capital Services Ltd. in respect of shares of companies - HELD THAT - All that the communication dated 15.05.2018 shows is that a survey report was generated vis- -vis Varun Capital Services Ltd. The said communication also alludes to the fact that assessee had entered into share transaction with Kisna Traders Pvt Ltd in the Financial Years(FY) 2014-15 and 2015-16 in respect of the shares referred to in the table. As to how this transaction led the AO to conclude/form an opinion that there was escapement of income is not articulated in the notice issued under Section 148A(b) of the Act. Petitioner says that this was an online trading and related to a genuine transaction between the petitioner and Kisna Traders Pvt Ltd. In our opinion the notice issued under Section 148A(b) of the Act should have clearly brought out the allegations against the petitioner. The impugned notices both under Section 148 and 148A(b) of the Act as also the order passed under Section 148A(d) of the Act are set aside with liberty to the AO to issue a fresh notice under Section 148A(b) of the Act wherein the AO will clearly articulate as to how according to him the income chargeable to tax has escaped assessment.
Issues:
Challenging notice under Section 148A(b) of the Income Tax Act, 1961, order under Section 148A(d) of the Act, and consequential notice under Section 148 of the Act. Analysis: The petition challenged a notice issued under Section 148A(b) of the Income Tax Act, 1961, along with an order under Section 148A(d) of the Act and a consequential notice under Section 148 of the Act. The impugned notice referred to a survey report regarding share transactions between the petitioner and another party. The communication highlighted specific transactions and beneficiaries, raising concerns of potential income escapement. The petitioner contended that the transactions were genuine and related to online trading. However, the court noted that the notice lacked clarity in articulating the allegations against the petitioner, necessitating a fresh notice with a clear explanation of the alleged income escapement. The court emphasized that the notice under Section 148A(b) should have explicitly outlined the grounds for suspecting income escapement. Consequently, the court set aside the impugned notices and order, granting the Assessing Officer (AO) the liberty to issue a fresh notice under Section 148A(b) within two weeks. The fresh notice must detail how the income chargeable to tax is believed to have escaped assessment. The AO was directed to provide accompanying material and grant the petitioner three weeks to respond. The court instructed the AO to proceed further in accordance with the law after the petitioner's response. In conclusion, the writ petition was disposed of with the aforementioned directions, and the pending application was closed accordingly.
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