Scope of decision u/s 148A(d) of Income Tax Act is limited to Existence or Information that Income chargeable to Tax has Escaped Assessment: Allahabad HC [Read Order]

The Allahabad High Court recently ruled that the scope of decision under Section 148A(d) of the Income Tax Act, 1961 is limited to existence or information that income chargeable to tax has escaped assessment.

Challenge in this writ petition is to the impugned order dated 25.05.2023 passed by the Assessing Officer, Income Tax Department/Respondent No.4 under Section 147 read with Section 144-B of the Income Tax Act, 1961 whereby and whereby a sum of Rs.1,20,59,813/- has been assessed as annual income for the Assessment Year 2015-16 and a demand of Rs.73,12,082/- towards tax has been raised against the petitioner. A challenge to the consequential notice under Section 148 of the Income Tax Act, 1961 dated 26.07.2022 has also been laid.

The counsel for the petitioner has argued that the case of the petitioner is squarely covered by the first proviso to Section 147 of the Income Tax Act as it stood prior to the amendment by the Finance Act, 2021 which provides that where assessment has already been completed under Section 143(3) of the Income Tax Act, no reassessment proceedings can be initiated after the expiry of four years from the relevant Assessment Year 2015-16 i.e. 31.03.2020 unless the income has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. In the absence of any such allegation against the petitioner the reassessment proceedings are wholly unwarranted.

The counsels for the Revenue in opposition to the writ petition submit that the objections filed by the petitioner/assessee have been duly considered and the assessing authority has found that it is a fit case to issue notice under Section 148 of the Income Tax Act.

A Division Bench comprising Justices Ashutosh Srivastava and Pritinker Diwaker observed that “Merits of the information referable to Section 148A thus remains subject to the reassessment proceedings initiated vide notice under Section 148 of the Act. It is for this reason that issues which require determination at the stage of reassessment proceedings and in respect of which departmental remedy is otherwise available are not required to be determined at the stage of decision by the assessing authority under Section 149A(d). The scope of decision under Section 148A(d) is limited to the existence or otherwise of information which suggests that income chargeable to tax has escaped assessment.”

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