The Delhi High Court, while quashing a pre-consultation notice under the provisions of section 148A of the Income Tax Act, 1961 held that such notice cannot be vague.
Quashing the impugned notice, Justice Manmohan and Justice Manmeet Pritam Singh Arora observed that “if the foundational allegation is missing in the notice issued under Section 148A(b) of the Act, the same cannot be incorporated by issuing a supplementary notice.”
The petitioner, M/s Catchy Prop-Build Private Limited approached the High Court contending that the impugned show cause notice dated 16th March, 2022 was issued under Section 148A(b) of the Act seeking to initiate reassessment proceedings against the assessee on account of some transactions of purchase and sale of shares undertaken by it. He states that the impugned show cause notice has been issued in violation of the provisions of Section 148A(b) of the Act as it merely states the transaction entered into by the Petitioner and does not contain any allegation of escapement of income.
The department admitted before the Court that the impugned show cause notice issued under Section 148A(b) of the Act is vague and pleaded that the Assessing Officer be given liberty to issue a supplementary notice under Section 148A(b) of the Act. In support of his submission, he relied upon the order passed by this Court in Mahashian Di Hatti Pvt. Limited Vs. Deputy Commissioner of Income Tax.
Rejecting the plea of the department, the Court held that “Having perused the paper book and having heard learned counsel for the parties, this Court is of the view that in the notice issued under Section 148A(b) of the income tax Act, the petitioner was never asked to explain the source of funds that were used by Manu Garments to purchase the shares of Bert Marketing Pvt. Ltd.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
