Notices under Income Tax provisions must adhere to procedural requirements; failure to properly assess basis for reopening invalidates the notices.

JUDGMENT :

BHARGAV D. KARIA, J.

1. Heard learned advocate Mr. Manish J. Shah for the petitioner and learned advocate Mr. Rutvij Patel for the respondent.

2. Rule returnable forthwith. Learned advocate Mr. Rutvij Patel for the respondent waives service of notice of rule.

3. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the notice dated 17.03.2023 issued under section 148A(b) of the INCOME TAX ACT , 1961 [for short ‘the Act’] as well as notice dated 31.03.2023 under section 148 of the Act and the order dated 31.03.2023 under section 148A(d) of the Act.

4. Brief facts of the case are that:

4.1 The petitioner is the son of late Ms. Mrudula Gandhi. A notice dated 17.03.2023 under section 148A(b) of the Act was issued in name of late Ms. Mrudula Gandhi to explain the source of credit amounting to Rs. 1,23,70,612/- appearing in her bank accounts for the Financial Year 2018-19 relevant to Assessment Year 2019-20.

4.2 On perusal of the show-cause notice under section 148A(b) of the Act, it appears that the respondent raised the issue regarding credit in the bank account of late mother of the petitioner on the ground that the same was not fully disclosed in her return of income resulting into suppression of income. Para 4 of the notice under section 148A(b) reads as under:

“In view of the facts narrated hereinabove, an opportunity of being heard is being provided to you as per requirement of section 148A(b) of the INCOME TAX ACT , 1961.

(i) The source of credits amount to Rs. 1,23,70,612/- appearing in your bank account as discussed above along with documentary evidence i.e. respective ledgers, bills, books of accounts, bank account highlighting the transactions and explain the source of said credits.

(ii) Any other documentary evidences you rely in support of your claim.

(iii) Further, it is also show caused as to whey a notice under section 148 should not be issued on the basis of the information in possession which suggests that income chargeable to tax has escaped assessment in this case for the relevant assessment year.”

4.3 The petitioner filed reply on 23.03.2023 explaining in detail the credit entries in the bank account of his late mother for the year under consideration and also submitted the return of income filed by late Ms. Mrudula Gandhi after considering all the transactions reflected in the bank accounts maintained with Equitas Small Finance Bank and Kotak Mahindra Bank Limited. It was contended in the reply that respondent does not have any material to come to a prima facie conclusion that it is a fit case to reopen the assessment as there is no escaped income from the information in possession of the respondent.

4.4 However, the respondent passed the impugned order under section 148A(d) of the Act on 31.03.2023 on the ground that there was an escaped income of Rs. 92,00,592/- which has remained unexplained as per the reply filed by the petitioner comprising of credit entries of loan reflected in the bank account of late Ms. Murdula Gandhi.

Being aggrieved, this petition is filed.

5. Learned advocate Mr. Manish Shah for the petitioner submitted that the respondent has issued the notice under section 148A(b) of the Act to furnish the information as stated in Para 4 of the impugned notice. It was submitted that as per the provision of section 148A(b) of the Act, the respondent is not supposed to call for any information as the same would be covered by the provision of section 148A(a) of the Act. It was submitted that the notice is required to be quashed only on this ground.

5.1 It was further submitted that the petitioner had filed