2023 (6) TMI 620 - HC - Income Tax

Reopening of assessment - correctness of the order passed u/s 148 along with the impugned order passed u/s 148A(d) - Order at Annexure-A does not reflect consideration of the replies made by the petitioner pursuant to the show cause notice - HELD THAT - Perused the impugned order passed u/s 148A(d) and the reasons clearly no consideration of the replies at Annexures G and J. The impugned order is passed stating that there are no details furnished with regard to source of remittances and purchases. A bare perusal of the table which is a part of the reply at Annexure 'G' would indicate otherwise. There is a case made out for reconsideration of the order under Section 148A(d) of the Act at Annexure-A. Accordingly, the order at Annexure-A is set aside with a direction to the Authority to reconsider the replies at Annexures G and J and advert to the same while passing fresh orders under Section 148A(d) of the Act. The petition is disposed off. The impugned order at Annexure-A is set aside subject to the directions as made out.

Summary

Issues involved:
The correctness of the order under Section 148 of the Income Tax Act, validity of the order under Section 148A(d) of the Act, challenge to the show cause notice.

Validity of the order under Section 148 of the Act:
The petitioner challenged the order dated 31.3.2023 passed under Section 148 of the Income Tax Act, contending that the order under Section 148A(d) did not reflect consideration of the detailed replies provided in response to the show cause notice. The petitioner argued that the replies submitted were detailed and provided necessary explanations for each transaction, emphasizing that certain transactions did not constitute income chargeable to tax. The court observed that the impugned order did not consider the replies furnished by the petitioner, specifically noting that the table in the reply indicated details contrary to the assertions in the order. Consequently, the court set aside the order under Section 148 and directed the Authority to reconsider the replies provided by the petitioner.

Validity of the order under Section 148A(d) of the Act:
The petitioner contended that the investment in shares should be considered a 'capital account transaction,' citing a decision of the Bombay High Court that had been accepted by the department. The petitioner argued that the treatment of investment in shares had been settled and should not be part of proceedings under Section 148A of the Act for 'escapement of income chargeable to tax.' The court, after examining the impugned order under Section 148A(d) and the reasons provided, found that the replies submitted by the petitioner had not been duly considered. The court noted discrepancies between the order and the details provided in the replies, leading to a decision to set aside the order under Section 148A(d) and instructing the Authority to reconsider the replies and take them into account while issuing fresh orders.

Challenge to the show cause notice:
The petitioner also challenged the show cause notice issued, arguing that the detailed replies submitted had not been adequately considered in subsequent orders. The court's decision to set aside the orders under Sections 148 and 148A(d) implied a rejection of the show cause notice as well. The petition was disposed of with directions to reconsider the replies and address them in the fresh orders to be issued. All contentions were kept open for further consideration.