The Assessing Officer must have tangible evidence linking the taxpayer to alleged income escape for valid reassessment under the Income Tax Act; mere suspicion is insufficient.

JUDGMENT :

BHARGAV D. KARIA, J.

1. Heard learned advocate Mr. B.S. Soparkar for the petitioner and learned Senior Standing Counsel Ms. Maithili Mehta for the respondent.

2. Having regard to the controversy involved in this petition in narrow compass, with consent of learned advocates, the matter is taken up for hearing.

3. Rule returnable forthwith. Learned Senior Standing Counsel Ms. Maithili Mehta waives service of notice of rule for respondent.

4. By this petition under Article 226 of the Constitution of India, the petitioner has prayed for quashing and setting aside the notice under Section 148 of the Income Tax Act, 1961 (for short ‘the Act’) dated 20.4.2021 and the order under Section 148A(d) of the Act dated 20.8.2022 and the notice under Section 148 of the Act dated 23.8.2022 issued pursuant to the order passed by the Hon’ble Supreme Court in case of Union of India v. Ashish Agarwal, reported in [2022] 286 Taxman 183 (SC).

5. The brief facts of the case are as under:

5.1 The petitioner, which is a partnership firm, filed its return of income for the Assessment Year 2013-14 on 30.9.2013 declaring total income at Rs. 1,53,68,182/- which was processed under Section 143(1) of the Act.

5.2 The case of the petitioner was selected for scrutiny assessment and Assessment Order under Section 143(3) of the Act was passed on17.12.2016 accepting the return income.

5.3 The petitioner, thereafter, received a notice under Section 148 of the Act dated 20.4.2021 for reopening the assessment for the A.Y. 2013-14. The said notice was issued under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act (for short ‘TOLA’) on the ground that there was extension of the time limit by the said Act, however, the Hon’ble Apex Court in case of Ashish Agrawal (supra) and thereafter in case of Union of India vs. Rajeev Bansal reported in 469 ITR 46 SC has provided guidelines for considering such notice issued under TOLA. Accordingly, the notice issued under Section 148 dated 20.4.2021 was considered to be notice issued under Section 148A(d) of the Act in view of the power exercised by the Hon’ble Apex Court under Article 142 of the Constitution of India and the respondent Assessing Officer provided the information and the documents relied upon for issuance of the notice in the form of reasons recorded. The petitioner also received the documents from the respondent Assessing Officer for issuance of the notice. The petitioner filed the objections dated 15.6.2022 to the notice under Section 148A(d) of the Act issued by the respondent on 26.5.2022. The petitioner thereafter received a letter dated 20.6.2022, which was replied on 14.7.2022 and thereafter the impugned order under Section 148A(d) was passed on 20.8.2022 rejecting the objections of the petitioner along with notice under Section 148 of the Act dated 23.8.2022.

6. Being aggrieved the petitioner has preferred this petition.

7. Learned advocate Mr. B.S. Soparkar for the petitioner submitted that the respondent Assessing Officer did not provide all the documents as directed by the Hon’ble Apex Court in case of Ashish Agarwal (Supra) and there is no information made available to the petitioner which suggest that the income chargeable to tax has escaped assessment as, on perusal of the reasons recorded, name of the petitioner is not appearing in any of the information provided to the petitioner.

7.1 It was further submitted that the petitioner has not provided any loans or advances to the Dishman Group of Companies but the petitioner has only paid the commission to the Dishman Phar