IMPORTANT POINT
Reopening of income tax assessments requires new information, not merely a change of opinion, to avoid arbitrary exercise of power.

JUDGMENT :

M.S. KARNIK, J.

1. Heard Mr. Sahish Mahambrey for the petitioner and Ms Amira Razak, learned Standing Counsel for the respondent.

2. This petition, under Articles 226 and 227 of the Constitution of India, challenges a notice dated 19.03.2024 under Section 148-A of the Income Tax Act, 1961 (said Act for short). The facts of the case in brief are as follows.

3. The petitioner is paralysed and therefore represented by his wife. The petitioner is running the business of Hardware and Paint (Retail) which is a proprietorship firm in the name and style of Dilip Traders at Naikwado, Calangute, Goa. The petitioner has been filing his income tax returns and paying the necessary tax for more than ten years. The petitioner along with his wife filed returns for the Assessment Year 2017-18. A notice under Section 142(1) and Section 129 of the said Act was issued to the petitioner and upon necessary explanation given by the petitioner and after due verification the assessment was completed by accepting the income return filed by the petitioner vide Assessment Order dated 31.12.2019 passed under Section 143(3) of the said Act.

4. The petitioner received notice dated 19.03.2024 under Section 148-A(b) of said Act stating that the income chargeable to tax has escaped assessment for the Assessment Year 2017-18 and the petitioner was asked to show cause as to why notice under Section 148 of the said Act should not be issued.

5. The petitioner filed response to the show cause notice vide his reply dated 21.03.2024 stating that the notice has been received after a period of three years after the completion of assessment and hence, it was beyond the period of three years as mandated under Section 148 of the said Act. It was further stated that the internal audit observation and change of opinion cannot be the sole ground to issue show cause notice under Section 148-A of the said Act as there have been no new facts noticed in the audit.

6. Despite the reply, it is the case of the petitioner that the respondent is conducting the investigation and seeking queries pursuant to the notice dated 19.03.2024. Present petition is therefore filed challenging the validity of the notice dated 19.03.2024 issued under Section 148-A(b) of the said Act.

7. Ms Amira Razak, learned Standing Counsel for the respondent invited our attention to the affidavit-in-reply filed on behalf of the respondent. It is submitted that the assessee filed returns of income on 31.03.2018 declaring total income of Rs.11,04,870/-. She submitted that the case of the petitioner was selected for scrutiny through Computer Assisted Scrutiny System (CASS). It is submitted that the scrutiny assessment was completed on 31.12.2019 under Section 143(3) of the said Act by accepting the return of income of the assessee. Further, the said assessment was audited by the Internal Audit Party on 13.03.2021 and the said Internal Audit Party raised the objection that the assessee has cash balance of Rs.6,30,856/- as on 08.11.2016 whereas, the assessee had deposited cash of Rs.71,81,000/- in Specified Bank Notes (for short SBNs) during the demonitization period. It is submitted that the business of the assessee was not amongst those which were permitted to receive SBNs currency even after 08.11.2016.

8. Ms Razak further submitted that the assessee is governed by the amended provisions of Sections 147 to 149 with effect from 01.04.2021. She submitted that in terms of Section 148 as amended with effect from 01.04.2021, objection by the Internal Audit Party comes with expression “information with the Assessing Officer.” Relying on Section 148, Ms Razak submitted that in view of the specific and clear information highlighted by the Internal Audit Party, case of the assessee was examined and taken up under Section 147 and notice under Section 148-A was issued to the petitioner.

9. Ms Razak further submitted that on the basis of the objection by the Internal Audit Party and pursuant to examining the records and du