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TMI Blog2024 (8) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... chanism requiring it to be processed further, for any action to be taken u/s 148 of the Act. It is difficult to accept that in every case any information which is derived from Section 135A of the Act would be sacrosanct and/or would be free of defects. Hence, once a defect is pointed out on such information as available on the portal, it would be certainly the duty of the AO to examine whether the version of the assessee in pointing out that the information is not correct, would require due consideration for any further action to be taken to issue notice u/s 148 of the Act. We find that in the present case, the assessee in fact had pointed out in her remarks that what has been disclosed by the assessee in the return of income was the correct income derived by the Petitioner in regard to the interest earned by the petitioner on deposits with the Canara Bank. Thus, such remarks or explanation as offered by the assessee necessarily was required to be considered, before the AO could proceed to obtain approval from the Commissioner of Income-tax and for the purpose of issuance of impugned notice u/s 148 of the Act. It is only after the Petitioner knocked the doors of the Court in the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired to be noted that the impugned notice has been issued dispensing with the provisions of Section 148A of the Act, on the ground that respondent No. 1 was in receipt of certain information as per the scheme notified under Section 135A of the Act, which provides for faceless collection of information. On the basis of such information an opinion is formed to issue the impugned notice. It would be appropriate to note the relevant extract of the impugned notice, which reads thus:- PAN: AJJPP6942Q A.Y: 2021-21 Dated: 26/03/2024 DIN Notice No: ITBA/AST/S/148_1/2023-24/ 1063365129(1) Notice under Section 148 of the Income-tax Act, 1961 Sir/Madam/M/s. 1. I have received information under the scheme notified u/s 135A pertaining to income chargeable to tax escaping assessment for the Assessment Year under consideration in your case. This notice is being issued after obtaining the prior approval of the PCIT, Thane-1 accorded on date 22-MAR-24 vide Reference No. 100000049055947. 2. I, therefore, propose to assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for the Assessment Year 2020-21 and I, hereby, require you to furni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est amount by her email dated 3rd April, 2021. 8. Respondent No. 1 however without dealing with the remarks and explanation offered by the petitioner in her reply dated 14th January, 2023, almost after a period of more than one year, issued to the petitioner, the impugned notice under Section 148 of the Act along with the approval of respondent No. 2 and the Preliminary Verification Report ( PVR ). The approval under Section 151 of the Act records that a notice under Section 148 of the Act be issued, without the requirement to follow the pre-issuance procedure under Section 148A of the Act. The reasons for forming an opinion that income has escaped assessment, were set out in the Annexure . In regard to the approval in Column 19 thereof under the caption recommendations of the Additional/Joint CIT, the following remarks were made:- I have gone through the facts of the case, material on records and proposal submitted by the AO and I recommend this as a fit case for issue of notice u/s. 148 of the Income Tax Act, 1961, if approved. 9. Further in Column No. 22 in regard to the reasons for according approval/rejection by the specified authority for issuance of notice under Section 148, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.41,235/- (TDS- 194A- Rs. 8,72,800/- and INT19-001-Rs. 17,68,435/-). Assessee has offered the interest income of Rs. 9,67,607/-. Assessee has not offered correct interest income. Findings : Assessee while filing the return of income has offered interest income of Rs. 1012221/-. As per e-verification data assessee has received interest income of Rs.3641113/-. The assessee has submitted that there are duplicate entries reported by the bank. To substantiate his claim assessee has not provided any documentary evidences. Thus this case requires further action as per IT Act. 12. It is on the above backdrop, the petitioner is before the Court inter alia contending that the impugned notice issued under Section 148 of the Act is issued without application of mind hence it is arbitrary. It is the petitioner s case that in issuing the impugned notice, respondent No. 1 has not taken into consideration, the correct facts, which infact were pointed out by the petitioner in her letter dated 3 April, 2021, as what was disclosed by the petitioner were the correct figures of the interest income. It hence submitted that no case was made out for the notice to be issued under Section 148 of the Act, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n are required to be noted as under:- (a) that this Hon ble Court be pleased to declare the impugned amendment that is, insertion of clause (d) of the Proviso to section 148A as unconstitutional and ultra vires Article 14, 19 (1) (g), 265 and 300A of the Constitution of India. (c) that this Hon'ble Court may be pleased to issue a Writ of Certiorari or a Writ in the nature of Certiorari or any other appropriate Writ, Order or direction, calling for the records of the Petitioner's case and after going into the legality and propriety thereof, to quash and set aside the notice issued under section 148 dated 26.03.2024 ( Exhibit D ); 14. The respondents have filed a counter-affidavit of Mr. Raj Kumar Meena, Income Tax Officer, Ward-1, Palghar. The reply-affidavit narrates the relevant facts to contend that the petitioner, who is an individual assessee filed her Return of Income for the Assessment Year 2020-21 on 22nd December, 2020 declaring total income of Rs. 11,27,800/- (after claiming deduction under Chapter VI A of Rs. 1,82,058/-), out of which, the income from other sources is shown at Rs. 9,67,607/-. It is stated that as per the PVR, the Commissioner of Income Tax (e-Veri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly affidavit further states that thereafter the case of the assessee was taken up by the National Faceless Assessment Center ( NFAC ) as per the procedure for faceless assessment proceedings. However, what is significant in the reply affidavit is that the respondents have fairly stated, that the contents and the exhibits of the Writ Petition on being carefully examined in regard to the actual interest accrued to the Petitioner, the information was re-verified from the system, and it was found that as on date, the amount of interest reflected on the system was Rs.8,72,800/-, received by the petitioner from the Canara Bank and not Rs. 26,41,235/- as reflected previously by the system. It is hence stated, that the Petitioner had correctly disclosed her interest income, in her return of income. It is however, stated that once a notice under Section 148 of the Act was issued, the NFAC had assumed jurisdiction to proceed further in pursuance of such notice and such facts will be taken into consideration during the course of pending assessment proceedings. It is, therefore, prayed that in these circumstances, the Court may dispose of this Petition on merits. 16. Learned Counsel for the Pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the contents of Paragraphs 12 and 13 of the reply affidavit, in which the respondents have fairly stated that there is no discrepancy in the interest income as disclosed by the petitioner in her return, which read thus :- 12. The contents and the exhibits of the Writ Petition was carefully examined. The actual interest accrued by the petitioner is re-verified from System and it is found that as on date the amount of interest reflected on the system is Rs. 8,72,800/- only from Canara Bank and not Rs. 26,41,235/- as was reflecting in the system previously. 13. In view of the facts as verified and obtained as on date, the Petitioner has correctly disclosed her interest income in her Return of Income. However, once a notice u/s 148 of the Act is issued, the NFAC assumes the jurisdiction to proceed further in pursuance of the said notice. The above facts will be taken into consideration during the course of the pending assessment proceedings. (emphasis Supplied) 20. As the case involves the applicability of the provisions of Section 135A of the Act, as applied by the respondents in the context of impugned notice issued to the petitioner under Section 148 of the Act, it would be nece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139: Provided that no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice: [ Provided further that no such approval shall be required where the Assessing Officer, with the prior approval of the specified authority, has passed an order under clause (d) of section 148A to the effect that it is a fit case to issue a notice under this section:] [ Provided also that any return of income, required to be furnished by an assessee under this section and furnished beyond the period al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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.] (emphasis supplied) 21. On a plain reading of Section 135A of the Act, it is clear that the Central Government is empowered to make a scheme by a notification in the Official Gazette, for the purposes of calling information under Section 133 of the Act, for collecting information under Section 133B or calling for information under Section 133C of the Act, or exercise power to inspect register of companies under Section 134, or for exercise of powers of Assessing Officer under Section 135 of the Act, so as to empower transparency and accountability by eliminating the interface between the income tax authority and the assessee, or any other person to the extent technologically feasible; optimizing utilizat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of a show-cause notice under Section 148 of the Act is resorted, it would be the duty and obligation of the respondents to verify or to have a basic scrutiny whether such information when cross checked with the materials furnished by the assessee, in the returns or otherwise would lead to a prima facie conclusion that income has escaped assessment, for further action to be taken under Section 148 of the Act. Thus, necessarily when electronic information is available under the faceless mechanism and there is other material available, as may be gathered by the Assessing Officer or furnished by the assessee, it would be incumbent on the Assessing Officer to apply his mind to all such materials and only thereafter take a well considered view of the matter to issue a notice under Section 148 of the Act by dispensing the provisions of Section 148A of the Act. Any failure or overlooking of these considerations in a given situation, may result in the assessee, being put to an unwarranted prejudice, by a defective action being resorted by the respondents resulting into the assessee facing an ordeal of a notice under Section 148 of the Act. It is hence the duty of the Assessing Officer to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration for any further action to be taken to issue notice under Section 148 of the Act. 27. We observe so, as we find that in the present case, the assessee in fact had pointed out in her remarks that what has been disclosed by the assessee in the return of income was the correct income derived by the Petitioner in regard to the interest earned by the petitioner on deposits with the Canara Bank. Thus, such remarks or explanation as offered by the assessee necessarily was required to be considered, before the Assessing Officer could proceed to obtain approval from the Commissioner of Income-tax and for the purpose of issuance of impugned notice under Section 148 of the Act. 28. It appears that it is only after the Petitioner knocked the doors of the Court in the present proceedings, the Assessing Officer has come across such information which indicates that what has been disclosed by the Petitioner in her return of income was the correct figure of income derived by the Petitioner as interest income received from the Canara Bank. Thus, in the present case, in our opinion, an exercise for verification of the correctness of the electronic information with the other information ..... X X X X Extracts X X X X X X X X Extracts X X X X
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