The amended Income Tax Act allows reassessment without prior 'reason to believe', broadening the scope for initiating proceedings based on third-party information.

JUDGMENT

Heard Shri. Abhinav Mehrotra, learned counsel for the petitioner; Shri. Gaurav Mahajan, learned counsel for the revenue and, Shri. Anant Kumar Tiwari, learned counsel for Union of India.

2. Matter is at the fresh stage.

3. Civil Misc. (Amendment) Application No. 3 of 2024 is allowed. Amendments are deemed to have been incorporated.

4. Challenge has been raised to the reassessment proceedings initiated against the petitioner under Section 147 read with Section 148 of the Income Tax Act, 1961 (hereinafter referred to as the 'Act'). In that context, further challenge has been raised to the order dated 6.3.2024 passed by the Assessing Authority under Section 148A(d) of the Act.

5. Primarily, learned counsel for the petitioner has submitted, there is no relevant material as may give rise to the reassessment proceedings initiated against the petitioner. The entire material referred to and relied upon by the Assessing Authority came to the hands of the revenue authorities, in the course of the search proceedings against the third party namely - M/s Omaxe Limited. Petitioner was not the person searched. Second, it has been submitted, the information obtained in the course of such search is extraneous. It does not indicate that any income has escaped assessment at the hands of the petitioner. Third, it has been submitted, integrity of the information furnished was doubtful, inasmuch as, on the own showing of the revenue authorities, the information confronted to the petitioner included data superimposed on the original data retrieved by the revenue authorities from M/s Omaxe Limited. Next it has been submitted, there is absolutely no basis to assume, even at this premature stage that the figures found recorded in the electronic account books of M/s Omaxe Limited had been backdated by ten years and/or had been divided by a factor of hundred. Further, it has been submitted, the information actually received by the revenue authorities was with respect to transactions not more than Rs. 10, 00, 000/-. By virtue of provisions of Section 149(1)(b) of the Act, no reassessment proceedings may arise against the petitioner for the A.Y. 2017-18, after 31.3.2021. Last, it has been submitted, wholly inadequate opportunity to reply to the notice issued under Section 148A(b) of the Act was granted inasmuch as the notice was of the date 26.2.2024. It was served on 27.2.2024 with the date for filing reply fixed on 4.3.2024. Thus, only six days' time was granted to the petitioner to furnish his reply as against the statutory minimum seven days required to be granted, by virtue of provisions under Section 148A(b) of the Act.

6. On the other hand, learned counsel for the revenue would submit, the correctness of the information received by the revenue is not justiciable. Insofar as the information received may remain relevant to the subjective opinion of the Assessing Authority as to the escapement of income at the hands of the petitioner, no further or deeper scrutiny of the information is warranted at this stage. Second, it has been submitted, there is no doubt to the recovery of hard-drive/storage device from the person searched namely M/s Omaxe Limited. There is also no doubt as to the fact that information was retrieved from that drive indicating deposit of money made by the petitioner with the said M/s Omaxe Limited. Further, upon deep analysis made by the revenue authorities, prima facie, it appears that the figures recorded in the said electronic records had been divided by hundred so as to conceal the quantum of transaction and further the transactions themselves had been backdated by ten years (prior to 30.06.2018) only to cause confusion. In any case, matter would be examined thread bare during the assessment proceedings that are yet to commence. Third, it has been submitted, keeping in mind the above, escapement of income from the tax alleged exceeds Rs. 8 crores as the figure "853312" is to be multiplied by hundred to reach at the corre