IMPORTANT POINT
The main legal point established in the judgment is the significance of adhering to the procedure prescribed under Section 148A of the Income Tax Act, 1961 before initiating reassessment proceedings. The judgment emphasizes the need for conducting an enquiry, providing an opportunity of being heard to the assessee, and passing a speaking order with prior approval of the specified authority.

JUDGMENT :

Avneesh Jhingan, J

1. This writ petition is filed seeking quashing of order dated 26.07.2022 passed under Section 148A(d) of the Income Tax Act, 1961 (for short the ‘Act’). Further prayer is for quashing of notice dated 30.06.2021 issued under Section 148 of the Act.

Facts

2. The petitioner is a Private Limited Company. For the Assessment year (for brevity AY) 2015-16, income tax return was filed on 04.11.2015 declaring NIL income. On 30.06.2021, notice under Section 148 of the Act was issued stating that there were reasons to believe that income chargeable to tax for AY 2015-2016 had escaped assessment. After the decision of the Supreme Court dated 04.05.2022 in the case of Union of India Vs. Ashish Agarwal (2022) 444 ITR 01 (SC), notice under Section 148A(b) of the Act was issued on 30.05.2022. The petitioner responded on 11.06.2022, demanded the details and the documents. Additional objections were filed on 14.06.2022. The information reproducing the worksheet mentioning the name of petitioner and other entities who had provided loan to M/S Om Sokhal Builders and Construction Private Limited was supplied on 27.06.2022. After rejection of objections on 26.07.2022, letter for issuance of a DIN No. to the notice under Section 148 of the Act was issued. Hence, the writ petition.

3. During the pendency of the petition, order under Section 147 read with Section 144(B) of the Act was passed on 25.05.2023. The petitioner preferred an appeal, but on 15.11.2023 filed an application for withdrawal of the appeal stating that it was filed under wrong impression that the writ petition challenging the reassessment proceedings was rendered infructuous.

Arguments of the Petitioner

4. Learned counsel for the petitioner argues that allegedly income of Rs.30,00,000/- escaped assessment, the reassessment proceedings are time barred, having being initiated beyond three years. The contention is that the adverse material was not provided along with the notice and the information relied upon does not relate to the petitioner. The notice is not as per the Section 151A and the scheme framed thereunder. The grievance is that the objections raised were not specifically dealt.

Contentions of the respondent

5. Learned counsel for the respondent argues that the petitioner has alternative remedy and filed appeal against the re-assessment order, the petition is liable to be dismissed. A reliance is placed on the decision of Division Bench of this Court in cases of Bhag Chand Jangid Vs. Principal Chief Commissoner of Income Tax and Ors. (DBCWP No.5819/2023) decided on 17.04.2023 and Ram Kishore Kadel Vs. Assistant Commissioner of Income Tax and Ors. (DBCWP No. 8947/2023) decided on 22.11.2023.

The impugned order is defended by arguing:-

(i) as per the information with the department income of Rs. 2,80,00,000/- had escaped assessment and the proceedings were within the limitation.

(ii) the petitioner was provided the information and the annexure ‘A-1’ was also annexed to the notice.

(iii) at the stage of initiation of reassessment the provisions of Section 151A of the Act shall not apply.

(iv) during the survey conducted of M/S Om Sokhal Builders and Construction Private Limited, materials relating to the petitioner was seized and lastly;

(v) the objections filed by the petitioner were considered and if still aggrieved can raise the issue in appeal.

Provisions & Guidelines

Section 148A

“[Conducting inquiry, providing opportunity before issue of notice under section 148.

148A. The Assessing Officer shall, before issuing any notice under section 148:-

(a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment;

(b) provide an opportunity of being heard to the assessee,[***], by serving upon him a notice to show cause within such time, as m