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TMI Blog2024 (12) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... the meaning of information for the purpose of section 148 which suggests that the income chargeable to tax has escaped assessment and the fact that the notice under section 148 of the Act in the case was issued on 27.07.2022. 2. Whether on facts and circumstances of the case and in law, the CIT(A) is justified in deleting the addition of Rs. 6,50,00,000/- of unexplained loan under section 68 of the Act without appreciating the verification and details discussed in the Assessment Order which shows that the creditworthiness of lender and genuineness of loan transaction remain unproved? 3. The appellant prays that the order of the CIT(A) on the grounds be set aside and confirm the order of the AO." 3. While in its Cross Objection, the assessee has raised the following grounds: - "1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) (NFAC) erred in holding the notice u/s 148 of the Act as valid without considering the fact that the same is time-barred as per the provisions of section 149 of the Act and therefore the reopening is bad in law. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) (NFAC) erred in not considerin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dingly, notice under section 148 of the Act was issued on 29.06.2021 on the basis that income to the extent of Rs. 6,50,00,000 chargeable to tax has escaped assessment within the meaning of section 147 of the Act. Pursuant to the decision of the Hon'ble Supreme Court in the case of Union of India vs. Ashish Agarwal, reported in (2022) 444 ITR 1 (SC), notice dated 29.06.2021 issued under section 148 of the Act was deemed to have been issued under section 148A of the Act, as substituted by the Finance Act, 2021, and was construed to be a show cause notice in terms of the provision of section 148A(b) of the Act. In view of the aforesaid decision of the Hon'ble Supreme Court in Ashish Agarwal (supra), the assessee was provided with the copy of reasons recorded prior to the issuance of the notice under section 148 of the Act, necessary approval to issue the said notice and also the details of the underlying information leading to the issue of the said notice under section 148 of the Act. Further time was granted to the assessee to furnish its explanation in support of its claim. After rejecting the objection filed by the assessee, an order under section 148A(d) of the Act was passed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction. It was held that the loan lender responded to the notices issued under section 133(6) of the Act also goes on to prove the identity of the lender. Accordingly, the learned CIT(A) concluded that section 68 of the Act is not attracted to the facts of the present case. Accordingly, the addition of Rs. 6,50,00,000/- made by the AO was directed to be deleted. Being aggrieved, Revenue is in appeal before us, whereas the assessee has filed the Cross Objection. 8. During the hearing, the learned Authorized Representative ("learned AR") vehemently relying upon the order passed by the learned CIT(A) submitted that reopening of assessment under section 147 of the Act, in the present case, is bad in law as the information relied upon by the AO for initiating the re-assessment proceeding does not fall within the ambit of the term "information" as provided in Explanation 1 to Section 148 of the Act. The learned AR further submitted that in the present case, the information was received from an internal audit memo dated 06.02.2018 issued by ACIT (OSD) Audit - 1(2), Mumbai and thus the same cannot be considered to be an objection raised by the Comptroller and Auditor General of Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. Explanation 1.- For the purposes of this section and section 148A, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means,- (i) any information flagged in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time; (ii) any final objection raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Explanation.-For the purposes of this section, specified authority means the specified authority referred to in section 151.]" 12. From a careful perusal of the aforesaid provisions of Section 148 and Section 148A of the Act, it is evident that before issuing any notice under section 148 of the Act, the AO is authorized to conduct any enquiry with respect to the information which suggests that the income chargeable to tax has escaped assessment. Further, the AO is required to provide an opportunity of being heard to the assessee by serving upon him a show cause notice as to why the notice under section 148 of the Act should not be issued on the basis of the informati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead as follows: - "Explanation 1.-For the purposes of this section and section 148A, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means,- (i) any information in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time; (ii) any audit objection to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of this Act; or (iii) any information received under an agreement referred to in section 90 or section 90A of the Act; or (iv) any information made available to the Assessing Officer under the scheme notified under section 135A; or (v) any information which requires action in consequence of the order of a Tribunal or a Court.]" 15. Thus, from the perusal of the amended Explanation 1 to Section 148 of the Act, it is evident that the same now also includes any audit objection to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of this A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause notice issued under section 148A(b) of the Act, pursuant to the decision of the Hon'ble Supreme Court in Ashish Agarwal (supra), and no separate notice under section 148A(b) of the Act was issued by the AO. Such being the facts, the date of the notice under section 148 (which is now considered to be a show cause notice under section 148A(b) of the Act), i.e., 29.06.2021 is relevant for the instant case. As noted in the foregoing paragraph, section 148A(b) of the Act specifically requires the AO to provide an opportunity of being heard to the assessee by issuing a show cause notice as to why the notice under section 148 should not be issued on the basis of the information which suggests that income chargeable to tax has escaped assessment. Therefore, we are of the considered view that whether the material satisfies the criteria of "information" as per the provisions of Explanation 1 to section 148 of the Act has to be analysed on the date of issuance of show cause notice under section 148A(b) of the Act, since such information remains constant till the culmination of the entire proceedings resulting in issuance of notice under section 148 of the Act and ultimately passing of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o maintaining that the original assessment order was correct. (f) The ACIT once again maintained its objections. This time the said Mr. Rajesh Meshram accepted that the AO did not properly examine the allowability of Rs. 6 Crore expense under the long term capital gains head. Hence, the audit objection was accepted leading to re-opening of the assessment of the income of Petitioner. (g) Relying upon the decision of the Apex Court in the matter of Ashish Agarwal (supra) the notice under section 148 of the Act dated 21st April 2021 issued under the old law was treated as notice under section 148A(b) of the Act. 11. The admitted facts clearly indicate that the basis of which the AO issued notice alleging that there was "information" that suggests escapement of income was an internal audit objection. What is information is explained in Section 148 of the Act to mean "any objection raised by the Comptroller and Auditor General of India....." and no one else. This itself makes the reopening of assessment in the present case impermissible. 12. Consequently, de-hors any audit objection raised by the CAG, a view deviating from that which was already taken during the course of issuin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse of assessment proceedings leading to the assessment order dated 30th September 2010. This change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment. 22. The fact that the notice was issued based on audit objections received by the assessing officer also does not find mention in the impugned notice. The assessing officer does not even mention in the impugned notice what was the information that he had received. The assessing officer has, as recorded in the notice, formed an opinion that because the assessee had gifted to Bezan Chenoy as per the Memorandum recording family arrangement, petitioner had resorted to colorable device by way of gift of the said property to avoid tax liability. Therefore, this was a fit case for invoking provisions of Section 50C of the Act. This does not indicate about any opinion having been received by the assessing officer by way of audit objections. Therefore, we will also have to hold that there can be no tangible material mentioned in the reasons recorded by the revenue which would want a different opinion being taken than which was taken when the original assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is impermissible in law. 15. In view of the above discussion, the Writ Petition is allowed. Rule is made absolute in terms of prayer clause (a), which reads as thus; "(a) that this Hon'ble Court may be pleased to issue a Writ of Certiorari or 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 (i) Notice u/s 148 dated July 30, 2022 issued by the Respondent No. 1 for AY 2015-16[Ex-Q], (ii) Approval u/s 151 dated 29/7/2022 [Ex-R] (iii) the impugned order dated July 29, 2022 passed under section 148A(d) by the Respondent No. 1 for A.Y. 2015-16 [Ex-P], (iv) Notice under section 148A(b) being the Notice u/s 148 dated May 31, 2021/April 21, 2021 for AY 2015-16 [Ex-A], and (v) the communication/letter dated May 28, 2022 [Ex-J]" 18. Therefore, respectfully following the decision of the Hon'ble Jurisdictional High Court and in view of the detailed analysis of the relevant provision of the statute, we find no merits in the submission of the Revenue that the amended provisions of Explanation 1 to section 148 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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