IMPORTANT POINT
The court established that under the amended Section 148A of the Income Tax Act, the requirement to record 'reason to believe' has been replaced with a subjective decision-making process, allowing for reassessment proceedings based on information suggesting income escapement without the need for detailed reasoning on each objection raised by the assessee.

JUDGMENT :

1. Heard Shri Rahul Agarwal, learned counsel for the petitioner and Shri Gaurav Mahajan, learned Senior Standing Counsel, for the revenue.

2. Challenge has been raised to the order dated 27.03.2024 passed under Section 148A(d) of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') and the consequential notice of the same date, issued under Section 148 of the Act for the Assessment Year 2020-21.

3. For the Assessment Year 2020-21, the petitioner had filed his regular return of income. However, no scrutiny assessment arose in his case. On 19.02.2024, a show cause notice was issued to the petitioner under Section 148A(b) of the Act, proposing to initiate reassessment proceeding for the Assessment Year 2020-21. The annexure to that notice contains the summary of information on which such proceedings were proposed to be initiated. It reads as below :

"As per information flagged under Risk Management strategy(RMS) formulated by Central Board of Direct Taxes (CBDT), it has been noticed that you have supplied goods /services of Rs. 73968000/-during financial year 2019-20 (relevant to assessment year 2020-21) to M/s Everett Infra and Engineering Equipments Private Limited. On the basis of enquiries conducted by the Income Tax Department it has been established the M/s Everett Infra and Engineering Equipments Private Limited is not doing any actual business activities and providing accommodation entries. This company is involved in receiving and giving bogus contracts/sub-contracts and raising invoices without delivery of any actual goods/services. The company is merely working as entry/exit provider.

As you have entered into the transaction with this bogus company which is involved in providing accommodation entries the supply of goods/services to this company also appears to be bogus. It leads to inference that you are also one of the participants the tax evasion mechanism of above company. The above information suggests escapement of income in your case. Please also refer to attachment of this show cause notice which encloses sheet containing details of information suggesting escapement of income in your case. The details of information has also been elaborately discussed in above para which may also be referred to.

In the light information (as discussed in above para) suggesting escapement of income in your case in assessment year 2020-21, please submit your response on the issue raised in this show cause notice by the due date, as mentioned in this notice, positively."

4. The petitioner responded to the above notice and submitted a detailed reply dated 18.03.2024. In that, the petitioner referred to entries recorded in his books of accounts and other materials to assert that he had actually sold goods to M/s Everett Infra and Engineering Equipments Pvt. Ltd. (hereinafter referred to as the 'purchaser). He also referred to the statement of profit and loss account of the purchaser to assert that the 'purchaser' had disclosed its revenue receipts in excess of Rs. 290 crores, for the Assessment Year 2020-21.

5. Thereafter, the petitioner's Assessing Authority passed the impugned order under section 148A(d) of the Act. It has rejected the petitioner's objection after relying on oral statements of certain entities, recorded during the course of other/search proceedings (not involving the petitioner or the 'purchaser'), as also on the reports of the Inspector of Income Tax, Central Circle-19, New Delhi, as received by the Assessing Authority. Also, reference has been made to the fact that notices/summons issued to the 'purchaser', arising from the information received from the Inspector of the Income Tax, have remained unresponded. The above information was communicated to the petitioner's Assessing Authority by the Deputy Commissioner of Income Tax, Central Circle-19, New Delhi.

6. In such fact background, learned counsel for the petitioner would submit, the petitioner's objections as to absence of relevant material, have