The division bench of the Bombay high court in a writ petition filed before it quashed the reopening assessment proceedings and held that Notice issued without satisfied condition precedent under section 147 of income tax act 1961 is invalid.
Section 147 of income tax act 1961 provides that the assessing officer shall issue notice if a reason to believe that any income chargeable to tax has escaped in any assessment year .
Mihir Naniwadekar , Rohan Deshpande , Farzeen Khambatta are the counsel appeared for petitioner and Suresh Kumar ,advocate appeared for the respondent .
Petitioner B.U. Bhandari Auto Lines Pvt. Ltd. after filing the return of income assessing officer issue notice on the ground that income chargeable to tax for the said year had escaped assessment,
Thereafter the assessing officer subsequently issued a notice under Section 148 of the Act dated 30.03.2021 seeking to reopen the assessment for the assessment year 2016-17 on the ground that income chargeable to tax for the said year had escaped assessment.
The reason for the aforesaid notice was, when a search was conducted the premises of the Mohit Garg found that petitioner was one of the beneficiaries of Mohit Garg’s shell entity M/s Magnum Tradex Pvt. Ltd.
Counsel appearing for the Petitioner, place relied upon the judgment in the case of Income-tax Officer Vs. Lakhmani Mewal submits that “reassessment proceedings initiated by the assessing officer based upon reasons furnished to the Petitioner, which reasons besides being vague and general, had no direct nexus or live link with the formation of the belief that the assessee’s income had escaped assessment”
Counsel for the revenue contented that there was enough material and reasons for the assessing officer to initiate reassessment proceedings based upon the information, which was clearly suggestive of the fact that income chargeable to tax had escaped assessment.
After considering the contention of the both side the division bench of Justice Dhiraj Singh Thakur And Kamal Khata allowed the petition and held that notice issued under Section 148 of the Income Tax Act 1961 was issued without satisfying the conditions precedent under Section 147 of the Income Tax Act 1961
Further the bench observed that the assessing officer did not explain the reason on what basis and material he came to the conclusion that M/s Magnum Tradex Pvt. Ltd., was indeed a shell entity.
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