The Calcutta High Court in a recent ruling while dismissing the writ petition filed by the assessee held that the court’s interference in each and every case would defeat the purpose of Section 148A(d) of the Income Tax Act 1961.
Section 148A(d) of the Income Tax Act 1961 deals with the opportunity given to the assessee by the Income Tax Officer before issuing notice if AO had reason to believe that the assessee had escaped any income.
The petitioner Debraj Dealers Private Limited, had filed a writ petition challenging the impugned order dated 29th July, 2022, related to assessment year 2017-18 in which the reply given by the AO was not satisfactory regarding the object of passing such order. The impugned order was passed without accepting the explanation given by the assessee petitioner relating to alleged escapement of income in the form of transaction of sale of shares to the tune of Rs. 50 lakhs were received by the petitioner from Runicha Merchants Gems Pvt. Ltd. through non-banking channels.
Pranit Bag, who appeared for the petitioner, contended that the objection to the notice under Section 148A(b) Income Tax Act 1961 had not been properly discussed and the reason given by the assessing officer in not accepting the explanation of the petitioner was not sufficient and satisfactory.
Om Narayan Rai, who appeared for the revenue, contented that the assessee petitioner has received accommodation entry of Rs. 50 lakhs in the banking account as manifested in certain forms of assets in the account. He also contended that the said account in the impugned order was undisclosed escaped income chargeable to tax.
The Single bench of MD. Nizamuddin held that the Writ Court should not exercise the writ jurisdiction to substitute the findings of an assessing officer. The bench also observed that the assessment order was not final and the petitioner had the option to drop the order after issuing notice under Section 148 of Income Tax Act 1961. The Court accordingly dismissed the petition holding that the Court’s Interference in Each and Every Case would Defeat the Purpose of S. 148A(d) of Income Tax Act.
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