“A statement of a person, which is not relatable to any incriminating document or material found during search and seizure operation cannot, by itself, trigger the assessment.”
The Rajasthan High Court quashed reopening of assessment as there was non supply of material referred to as “reasons to believe”.
The petitioner, Micro Marbles Private Limited is a private limited company engaged in manufacturing of marble slabs and tiles. It filed its income tax return for the assessment year 2017-2018 and the same was processed under Section 143(1) of the Income Tax Act, 1961 and an intimation regarding acceptance of ‘nil’ tax liability was issued to it by the Centralized Processing Centre of the Income Tax Department.
The Bench comprising Chief Justice Pankaj Mithal and Justice Rekha Borana observed that “The non-supply of the material referred to in the reasons to believe would be enough to render the proceedings bad, even though the material for forming the opinion may be sufficient.”
The petitioner received a notice under Section 148 of the Act for reopening of its assessment for the year 2017-2018 on the ground that there are reasons to believe that its income for the relevant year has escaped assessment.
The petitioner on receipt of the above reasons for reopening its case under Section 148 of the Act filed objections stating that the revenue is proposing to reopen its case not for reason to believe but for reason to suspect.
The petitioner also contended that it has not been provided with the necessary documents such as the account books of M/s. Sanmatri Gems Private Limited showing the alleged bogus entries in its name or the statement of Deepak Jain purported to have been recorded under Section 132(4) of the Act. The said objections were disposed of vide order dated 18.08.2021 holding that the same have no force.
It is in the above backdrop that the petitioner invoked the writ jurisdiction of this Court for the purposes of quashing of the notice issued under Section 148 of the Act.
“We are of the opinion that shorn of all other technical aspects which may have been raised before us, the very fact that the material referred to in the “reasons to believe” was not supplied to the petitioner, the entire proceedings for the reopening of the assessment and leading to the consequential assessment stand vitiated in law” the Court said.
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