IMPORTANT POINT
The requirement of prior approval of the specified authority under Section 148A(d) satisfies the condition for issuance of a notice under Section 148 of the Income Tax Act, 1961.

JUDGMENT :

CHAKRADHARI SHARAN SINGH, J.

The petitioner is an assessee, who has been allotted Permanent Account Number (PAN) AYKPS5218E within the meaning of Section 2(7) of the Income Tax Act, 1961(“the Act” for short), has filed the present writ application seeking following reliefs:-

“I) quashing the show cause notice dated 05.07.2022 (Annexure-1) issued to the petitioner under section 148A(b) of the Income Tax Act, 1961 (hereinafter “the Act”) by the respondent Assistant Commissioner of Income Tax (hereinafter referred to as “the Assessing Officer” for the Assessment Year 2018-19.

II) quashing the order dated 19.08.2022 passed under section 148A(d) of the Act (Annexure-2) holding it to be a fit case for issuance of notice under section 148 of the Act.

“I) quashing the show cause notice dated 05.07.2022 (Annexure-1) issued to the petitioner under section 148A(b) of the Income Tax Act, 1961 (hereinafter “the Act”) by the respondent Assistant Commissioner of Income Tax (hereinafter referred to as “the Assessing Officer” for the Assessment Year 2018-19.

II) quashing the order dated 19.08.2022 passed under section 148A(d) of the Act (Annexure-2) holding it to be a fit case for issuance of

III) quashing the notice dated 22.08.2022 issued under section 148 of the Act (Annexure-3 Series) by the respondent Assessing Officer calling upon the petitioner to furnish a return of income within 30 days of service of the notice”

2. It is the petitioner’s case that she had voluntarily filed her return of income for the assessment year 2018-19 in terms of Section 139(1) of the Act declaring a total income of Rs.4.12 crores on which income tax of Rs.65.64 lakhs was duly paid. In return, the dividend income of Rs.4.04 crores received during the year from a mutual fund, namely, JM Equity Hybrid Fund-Regular-Annual IDCW Option, was duly claimed as exempt under Section 10(35) of the Act. The return was duly processed under Section 143(1) of the Act in terms of the intimation dated 02.02.2019 and no further demand by way of tax was ever raised against the petitioner. Further, a show cause notice dated 23.03.2022 was issued under Section 148A(b) of the Act by the Assessing Officer on the ground that he had information which suggested that the income chargeable to tax had escaped assessment within the meaning of Section 147 of the Act. The information was received from the Investigation Wing to the effect that the petitioner had received dividend of Rs.4,04,55,592/-from equity-based mutual fund which was claimed as exempt under Section 10(35) of the Act which was a sham transaction generated using colourable devices, being not on account of appreciation of the investment but a return of a part of capital itself. The dividend being sham and capital loss being artificial, it was not eligible for set off and therefore, the dividend was also required to be reduced from the cost of investment and, accordingly, capital loss was also to be reduced.

3. The petitioner, responding to the said notice had filed a reply on 27.03.2022 demanding copies of all the relied upon documents which had not been enclosed, so as to enable her to file the detailed objection against proposed initiation of reassessment proceeding for the year under consideration. However, an order was passed on 30.03.2022 under Section 148A(d) of the Act, holding that there was information with the Assessing Officer which suggested that the income chargeable to tax had escaped assessment and, accordingly, it was a fit case to issue notice under Section 148 of the Act. It is the petitioner’s case that her request for supply of documents was though noticed in the order dated 30.03.2022, the same was glossed over with a bald assertion that the present proceeding was based on the information in the form of a report of Investigation Wing (DDIT, Mumbai) in the light of survey conducted in the case of M/s JM Financial Assets Management Ltd. (“JM Financial” for short). Consequently, the Assessing Officer issue