2023 (10) TMI 209 - HC - Income Tax

Reopening of assessment - assessee has not offered his unaccounted unexplained income for taxation purpose in his return of income - time limit provided to submit reply to the show cause notice u/s 148A(b) was in contravention of the requirement of the law inasmuch as the law contemplate 07 day but only 05 days were provided to the petitioners - HELD THAT - The Income Tax Act, 1961 does not contemplate any detailed adjudication on the merits of information available with the Assessing Officer at the stage of passing order under section 148A(d) of the Act of 1961. In our considered view there is a specific purpose for not introducing any further enquiry or adjudication in the statute, on the correctness or otherwise of the information, at this stage. The reason for it is obvious. Under the scheme of the Act a detailed procedure has been provided under Section 148 for issuance of notice whereafter the assessing authority has to determine, in the manner specified, whether income has escaped assessment and the defence of assessee, on all permissible grounds, remains open to be pressed at such stage. The ultimate determination made by the assessing authority under Section 147 for reassessment is otherwise subject to appeal under Section 246-A of the Act. Merits of the information referable to Section 148A thus remains subject to the reassessment proceedings initiated vide notice under Section 148 of the Act. It is for this reason that issues which require determination at the stage of reassessment proceedings and in respect of which departmental remedy is otherwise available are not required to be determined at the stage of decision by the assessing authority under Section 149A(d). The scope of decision under Section 148A(d) is limited to the existence or otherwise of information which suggests that income chargeable to tax has escaped assessment. Thus, in our opinion, the impugned order under Section 148A(d) of the Act and notice under Section 148 would not warrant any interference under Article 226 of the constitution of India as challenge to such order would be available to an assessee while challenging the order passed in reassessment proceedings consequent to the notice issued under Section 148 of the Act. The Apex Court in the case of Anshul Jain 2022 (10) TMI 3 - SC ORDER as what is challenged before the High Court was the re-opening notice under Section 148A(d) of the Income Tax Act, 1961. The notices have been issued, after considering the objections raised by the petitioner. If the petitioner has any grievance on merits thereafter, the same has to be agitated before the Assessing Officer in the reassessment proceedings. Under the circumstances, the High Court has rightly dismissed the writ petition. Thus no merit in challenge against order passed u/s 148A. WP dismissed.

Summary

Issues involved:
The challenge to the order and notice initiating reassessment proceedings for the assessment year 2019-20, with arguments regarding jurisdiction, compliance with natural justice, and sufficiency of information.

Details of the Judgment:

Jurisdiction and Compliance with Natural Justice:
The petitioner, a partnership firm, challenged the order and notice for reassessment proceedings for the assessment year 2019-20. The petitioner argued that the order passed by the Respondent No.1 lacked application of mind and violated principles of natural justice by not providing an opportunity for a personal hearing. The petitioner contended that the reassessment proceedings were initiated without jurisdiction, as the time limit provided for submitting a reply to the show cause notice was shorter than required by law. The petitioner also raised issues regarding the lack of provision of necessary documents and information. The court noted the arguments but found substance in the submissions of the Revenue's counsel, emphasizing that detailed adjudication on the merits of information at the stage of passing the order under Section 148A(d) of the Income Tax Act was not required. The court highlighted that the ultimate determination under Section 147 for reassessment was subject to appeal, and the scope of decision under Section 148A(d) was limited to whether information suggested that income had escaped assessment.

Sufficiency of Information for Reassessment:
The Respondent No.1 passed an order rejecting the petitioner's objection to the show cause notice under Section 148A(b) of the Income Tax Act, citing the need to verify a transaction of Rs. 1,75,00,000. The court observed that the Respondent No.1 had certain information indicating that income chargeable to tax had escaped assessment for the assessment year 2019-20. A consequential notice under Section 148 of the Act was also issued to the petitioner. The court held that the impugned order and notice did not warrant interference under Article 226 of the Constitution, as challenges could be raised during reassessment proceedings.

Conclusion:
The court dismissed the writ petition, finding no merit in the challenge to the order and notice dated 31.03.2023 under the Income Tax Act, 1961. The court cited a previous decision emphasizing that grievances on merits should be raised before the Assessing Officer in reassessment proceedings. The judgment highlighted that challenges to the order passed in reassessment proceedings could be pursued through available remedies, and the writ petition was thus dismissed without costs.