Information is Relevant to 'Suggestion' as to 'Escapement of Income': Allahabad HC upholds Assessment Proceedings [Read Order]
Information – Relevant – Suggestion – Escapement of Income – Allahabad HC – Assessment Proceedings – taxscan
Information – Relevant – Suggestion – Escapement of Income – Allahabad HC – Assessment Proceedings – taxscan
Upholding the assessment proceedings under the Income Tax Act, 1961, the Allahabad High Court held that information is relevant to 'suggestion' as to 'escapement of income'.
The challenge has been raised to the order passed under Section 148A(d) of the Income Tax Act, 1961 and the consequential notice of the same date, issued under Section 148 of the Act for the Assessment Year 2020-21.
The Assessing Authority passed the impugned order under section 148A(d) of the Income Tax Act. It has rejected the petitioner's objection after relying on oral statements of certain entities, recorded during the course of other/search proceedings (not involving the petitioner or the 'purchaser'), as also on the reports of the Inspector of Income Tax, New Delhi, as received by the Assessing Authority. Also, reference has been made to the fact that notices/summons issued to the 'purchaser', arising from the information received from the Inspector of the Income Tax, have remained unresponded.
The counsel for the petitioner contended that the assessing authority may 'decide', on the strength of material available on record (including the reply of the assessee), whether it is a 'fit case' to initiate reassessment proceedings. That exercise has not been done. The order passed under Section 148A(d) of the Act is wholly non-speaking. It has been passed in a perfunctory manner with a pre-conceived notion. Therefore, the same may never be sustained as jurisdiction has not arisen to reassess the petitioner for the Assessment Year 2020-21.
The counsel for the revenue contended that, the pre-requirement of 'reason to believe' has been done away. Therefore, the strict test of existence of such 'reason to believe'-to initiate reassessment proceedings cannot be reintroduced by reading the amended statute in the manner suggested. In his submission, insofar as show cause notice was issued to the petitioner and its reply was 'considered' before the impugned order [under Section 148A(d)] was passed, no procedural lapse has occurred.
A Division Bench of Justices Donadi Ramesh and S.D. Singh noted that “No direct evidence was disclosed by the petitioner, (in his reply), - to doubt the existence of that 'information'. The 'suggestion' as to escapement of income qua sales made to the (non-existing) 'purchaser', inheres in it. Thus, the 'information' is relevant to the 'suggestion' as to 'escapement of income' at the hands of the petitioner.”
“Strictly speaking that requirement of law did not exist even under the unamended law. Even then, as noted above, the strict test of 'reason to believe' having been done away and replaced with the more subjective and lighter test of 'suggestion' arising from the 'information' received by an assessing officer-that income may have escaped assessment, we are not inclined to lay down a stricter test (to be satisfied by the assessing authorities), while making a subjective 'decision', to initiate the reassessment” the Court held.
To Read the full text of the Order CLICK HERE
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