In a recent case, the Bombay High Court held that Reassessment proceedings were not valid since it violates procedure prescribed under Section 148A(b) of Income Tax Act, 1961.
Anurag Gupta, the Petitioner challenged the notice under Section 148 of the Income Tax Act, 1961 dated 26 March 2022 and the notice dated 08th March 2022 under Section 148A(b) of the Act as also the Order passed in terms of Section 148A(d) of the Income Tax Act.
The Petitioner filed his return as an individual for the assessment year 2018-19 under Section 139(1) of the Act. The return was processed under Section 143(1). Later a notice under Section 148A(b) of the Act dated 8 March 2022 was issued by Respondent No.1 suggesting that income liable to tax for the assessment year 2018-19 had escaped assessment and called upon the Petitioner to show cause as to why notice under Section 148 be not issued.
The Petitioner denied that there was any transaction with BGR Construction LLP and that no warehouse had been booked or payment made to the said entity. The Petitioner also denied any ‘on-money cash transaction’ with the said entity and therefore, demanded to drop the proceedings initiated under Section 147 of the Act.
The assessing officer proceeds to record its satisfaction, firstly, that cash payments had been made by the assessee to BGR Construction LLP as had been confirmed by the transferee of the said entity in the statement recorded during the survey action and, secondly, that the assessee had entered into a conveyance deed as a purchaser with Meet Spaces LLP for consideration of Rs.10,00,000/-, which remained unexplained.
It was contended by the petitioner that the procedure as prescribed under Section 148A(b) of the Act as also the principles of natural justice had been violated since the Petitioner was given the information in terms of Section 148A(b) of the Act, the material which ought to have been provided to the Petitioner was not so furnished, in the absence whereof the Petitioner was precluded from fling an effective reply to the show cause notice.
The revenue stated that there was no such obligation cast upon the revenue in terms of Section 148A(b) of the Act to provide to the assessee anything beyond providing him with the information.
A two-member bench comprising Justices Dhiraj Singh Thakur and Justices Valmiki Sa Menezes observed that the reassessment proceedings initiated are unsustainable on the ground of violation of the procedure prescribed under Section 148A(b) of the Act on account of the failure of the assessing officer to provide the requisite material which ought to have been supplied along with the information in terms of the said section.
While allowing the petition, the impugned order dated 25 March 2022 passed under Section 148A(d) of the Act, and the notice impugned dated 26 March 2022 under Section 148 of the Act are quashed.
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