The Assessing Officer must provide an opportunity for hearing and consider the assessee's objections before issuing a notice under Section 148, ensuring adherence to principles of natural justice.

Order :

AVNEESH JHINGAN, J.

1. This petition is filed seeking quashing of the order dated 17.04.2023 passed under Section 148-A (b) of the Income Tax Act, 1961 (for short ‘the Act’).

2. The relevant facts are that the petitioner-Company filed the returns for the Assessment Year 2019-2020. A notice dated 27.03.2023 under Section 148-A(b) was issued annexing the reasons for initiating reassessment proceedings. The petitioner filed objections dated 11.04.2023 filed by petitioner were rejected vide order dated 17.04.2023. Hence, the present petition.

3. Learned senior counsel for the petitioner submits that the initiation of the reassessment proceedings is on the basis of suspicion. In the chain made out by the Investigation Wing, relying upon the information from the Goods and Services Tax department, the transactions by one of the dealers was found doubtful. The contention is that there is no material for initiating the reassessment proceedings.

3.1 The grievance is that the petitioner in the objections had specifically stated that the information received by the department is wrong. As per the department, petitioner made purchases from Mr. Saswata Bhattacharya of Rs.1,45,45,088/- and of Rs.10,23,309/- from Mr. Sunil Sharma, whereas as per returns of the petitioner, the purchases were of Rs.8,26,000/- (including GST) from Mr. Saswata Bhattacharya and Rs.9,66,912/- (including GST) from Mr. Sunil Sharma.

3.2 The argument is that the material relied upon by the department for arriving at the figures mentioned in the notice was demanded but without supplying the material and dealing with the objections raised, the impugned order passed.

4. Learned counsel for the respondents submits that the information was received from the Investigation Wing and the figures were taken from the inside portal.

Provisions & Guidelines:

Section 148A: [Conducting inquiry, providing opportunity before issue of notice under section 148.

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 may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a);

(c) consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in clause (b);

(d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in clause (c) is received by him, or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish a reply as per clause (b) expires:

Provided that the provisions of this section shall not apply in a case where,-

(a) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of the assessee on or after the 1st day of April, 2021;

or (b) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a search under section 132 or requisitioned under section 132A, in the case of any other person o