The HC quashed the show cause notice issued u/s 148A(b) and the ...

Income Tax Reopening Quashed Over Mechanical Reliance on CGST Data Sans Verification of Assessee's Records.

January 8, 2025

Case Laws     Income Tax     HC

The HC quashed the show cause notice issued u/s 148A(b) and the consequent order u/s 148A(d) of the Income Tax Act. The HC held that the assessing officer and the PCIT exhibited gross non-application of mind in reopening the assessment merely based on information from CGST authorities about the assessee receiving payments from an entity allegedly involved in bogus invoicing, without verifying the assessee's credentials, returns, and supporting documents. The HC criticized the mechanical approach adopted by the tax authorities in intermixing CGST and Income Tax jurisdictions, stating that information under one regime cannot automatically apply to the other without tangible material indicating relevance to the assessee's income. The PCIT's remarks granting approval u/s 151 crossed limits of legitimacy, amounting to an abuse of authority.

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