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TMI Blog2023 (5) TMI 707X X X X Extracts X X X X X X X X Extracts X X X X ..... on available qua the order passed under section 148A(d) - The limited scope available under Article 226 of the Constitution of India to adjudicate an order passed under section 148A(d) of the Act, 1961 would be confined to existence of the information only, in view of the scheme of the Act of 1961. A contrary construction cannot be culled out from the judgment of the Supreme Court of India in Red Chilli International Sales [ 2023 (1) TMI 674 - SC ORDER] In Anshul Jain [ 2022 (10) TMI 3 - SC ORDER] the Supreme Court did examine the scope of proceedings under section 148A vis-a-vis reassessment proceedings u/s 148 of the Act to observe that by the very nature of proceedings the examination would remain more exhaustive at the stage of reassessment proceedings with elaborate remedies available under the statute to the assessee. The order passed by the AO u/s 148A(d) regarding existence of information suggesting that income chargeable to tax has escaped assessment would otherwise remain subject to reassessment order passed under section 148 - Thus, any observations of the assessing authority while passing order u/s 148A(d) with regard to merits of assessment of income would rema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out actual supply of goods and in turn in issuing fake invoices to others without actual supply of goods. Aforesaid facts imply that the parties which have claimed to have availed purchases from M/s Kuhoje K Achumi have only indulged in availing of purchase invoices without any actual movement of goods and by doing so, they have artificially inflated their purchase expenses and reduced their taxable income. You are reported as one of such suspicious purchasers and the purchase value in your case for F.Y. 2018-19 relevant to A.Y. 2019-20 is Rs. 96,43,750/- from M/s Kuhoje K Achumi. (B) Similarly, Information was received by DDIT (Inv.), Unit- III, Nagpur from CBDT, in the case of M/s Om Traders (Prop. Jasbir Singh Chatwal) of availing fraudulent ITC. On the basis of the above information, the Investigation Unit-III, Nagpur took up investigation and it is found that M/s Om Traders (Prop. Jasbir Singh Chatwal) has indulged in availing fake tax invoices which implies that there is no actual movement of goods to M/s Om Traders. Further, M/s Om Traders has made sales to number of entities. Since M/s Om Traders is indulged in fictitious purchases, therefore, the sales are also fictitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortunity of cross-examination of the said suppliers. 5. The jurisdictional authority has proceeded to pass an order on 29.3.2023 under Section 148(d) of the Act rejecting the petitioner s objection to the notice on the ground that information exists to suggest that transactions referred to in the notice are fictitious and without actual supply of goods. Consequently, petitioner s purchases are treated as fictitious for the Financial Year 2018-19 amounting to Rs. 1,79,68,750/-. This amount has been treated as having escaped assessment for the year 2019-20 for the purposes of initiating proceeding under Section 148 of the Act. Petitioner s request for cross-examination of suppliers and furnishing of material has been declined considering the time-barring nature of the matter. A consequential notice has also been issued to petitioner on 29.03.2023, under Section 148 of the Act. Aggrieved by the order under Section 148A(d) of the Act, dated 29.03.2023 as well as notice of the same date i.e. 29.3.2023 issued under Section 148 of the Act, the petitioner has approached this Court. 6. Sri Ashish Bansal for the petitioner submits that the authority concerned has not examined the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Tax Act, 1961 as well as section 148A introduced in the Act of 1961 vide Finance Act 2021 are reproduced hereinafter:- 147. Income escaping assessment. - If any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the Assessing Officer may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for such assessment year (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year). Explanation. - For the purposes of assessment or reassessment or recomputation under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, irrespective of the fact that the provisions of section 148A have not been complied with.] 148. Issue of notice where income has escaped assessment. - Before making the assessment, reassessment or re-computation under section 147, and subject to the provisions of section 148A, the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t day of April, 2021, in the case of the assessee; or (ii) a survey is conducted under section 133A, other than under sub-section (2A) of that section, on or after the 1st day of April, 2021, in the case of the assessee; or (iii) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned under section 132 or under section 132A in case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or (iv) the Assessing Officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any books of account or documents, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee, the Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee the search is initiated or books of account, other documents or any assets are requisitioned or surve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or thing, seized in a search under section 132 or requisitioned under section 132A, in the case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or (c) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or documents, seized in a search under section 132 or requisitioned under section 132A, in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, [relate to, the assessee; or (d) the Assessing Officer has received any information under the scheme notified under section 135A pertaining to income chargeable to tax escaping assessment for any assessment year in the case of the assessee.] Explanation. - For the purpose of this section, specified authority means the specified authority referred to in section 151. 9. Reading of Section 148A reveals that the assessing authority shall, before issuing any notice under section 148 conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tually escaped assessment is then to be made after notice under section 148, by passing an order of assessment or reassessment under section 147, subject to the provisions of section 148 to 153 of the Act of 1961. 12. The Act of 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has escaped assessment that the scope of enquiry rests under Section 148A(d). The correctness or otherwise of information is an aspect to be gone into later by the assessing authority at the stage of proceedings under Section 148 of the Act for reassessment. Any other interpretation, in our view, is not countenanced in the scheme of the Act of 1961. 15. The information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment has been defined in Explanation 1 to the second proviso to section 148 of the Act which is already extracted above. There is no challenge to the information contained in the notice under section 148A(b) of the Act on the ground that the information available with the Assessing Officer is not referable to Explanation 1 to the second proviso to section 148 of the Act. The Finance Act, 2021 is otherwise not under challenge. We are, therefore, of the considered opinion that the challenge to the information, by the assessee, on the defence setup in reply to show cause notice merits no further consideration at the stage of decision under section 148A(d) of the Act. 16. The term information for the purposes of reopeni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as overlooked or not taken into consideration. Similarly, if audit points out some information or facts available outside the record or any arithmetical mistake, assessment can be reopened. 32. The expression information means instruction or knowledge derived from an external source concerning facts or parties or as to law relating to and/or after bearing on the assessment. We are of the clear view that on the basis of information received and if the assessing officer is satisfied that reasonable ground exists to believe, then in that case the power of the assessing authority extends to reopening of assessment, if for any reason, the whole or any part of the turnover of the business of the dealer has escaped assessment or has been under-assessed and the assessment in such a case would be valid even if the materials, on the basis of which the earlier assessing authority passed the order and the successor assessing authority proceeded, were same. The question still is as to whether in the present case, the assessing authority was satisfied or not. 17. In the facts of the present case the assessing authority has received information from DDIT (investigation), Unit III, Nag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt observed that no interference by the writ court was warranted in the order passed under section 148A(d) of the Act as all the grounds of 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, 1961. 20. The above order of Division Bench of High Court of Punjab and Haryana was challenged before the Supreme Court of India in Anshul Jain vs. Pr. CIT, [2022] 143 taxmann.com 38, wherein the Court has observed as under:- What is challenged before the High Court was the reopening 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 re-assessment proceedings. Under the circumstances, the High Court has rightly dismissed the writ petition. No interference of this Court is called for. The present Special Leave Petition stands dismissed. 21. So far as the judgment of Supreme Court of India in Red Chilli International Sales ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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