Taxpayer Cannot Demand Entire Material at S. 148A(b) Stage, “Information” Means Concise Details: Delhi HC [Read Order]

In a recent ruling, the Delhi High Court held that a taxpayer cannot demand full documents and entire material at the Section 148A(b) stage, and “information” only means a short and concise narration of what the Assessing Officer is alleging.

MHJ Metaltechs Pvt. Ltd. filed a writ petition challenging the reassessment notice under Section 148A(b) and the later letter. The notice mentioned two amounts Rs. 46,00,460 as bogus purchases and Rs. 89,86,36,597 as fictitious sales.

The petitioner’s counsel argued that no proper details were given, so it could not file an effective reply. The counsel argued that later the AO changed the supplier name for the Rs. 46,00,460 transaction and this shows the case is based on no clear material.

The Department’s counsel argued that earlier only the Section 148A(d) order was quashed in the previous writ, but the Section 148A(b) notice remained. They argued that the AO already gave required information and the assessee cannot ask for full reports and documents at this stage.

The bench comprising Justice Dinesh Mehta and Justice Vinod Kumar observed that Section 148A(1) (as it stood before amendment) only requires “information suggesting income chargeable to tax has escaped assessment” to be supplied. The court explained that “information” means a concise narration of the conclusion or inference drawn by the Assessing Officer from the material available.

The court also observed that the statute makes a clear distinction between “material available on record” and “information to be supplied”. The court observed that supplying information does not mean supplying copies of the entire material on record along with the notice.

The court also pointed out that if the petitioner’s argument is accepted and full material is required to be supplied at this stage, it will delay the proceedings and may give the assessee an unwarranted chance to manufacture a defence. At the same time, the court observed that the burden remains on the Assessing Officer to prove by cogent evidence that the assessee indulged in transactions outside the books.

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