A reassessment notice must be based on specific and valid information suggesting income has escaped assessment, and changing the basis for reassessment mid-proceeding is impermissible under the Income Tax Act.

JUDGMENT :

Om Narayan Rai, J.

1. This writ petition has been filed assailing proceedings for reassessment of the petitioner’s income for the Assessment Year 2019-20.

FACTS OF THE CASE:

2. A brief summary of the facts gathered from the writ petition may first be noticed:-

a) The petitioner is a Government company. It is under the control of the Ministry of Petroleum and Natural Gas, Government of India and is classified as a category-I, Miniratna Company.

b) Of the several businesses which the company conducts, one is to provide travel facilities including air travel services to its customers.

c) In course of its air travel services, the petitioner’s customers often seek for air travel insurance and the petitioner facilitates the same through its empanelled insurers which includes M/s. Reliance General Insurance Company Limited (hereafter “Reliance”). For such purpose, the petitioner collects the amount payable to the insurance company from its customers and remits the sums to Reliance. The insurance policy is directly issued in the name of the petitioner’s customers and the petitioner earns commission for facilitating such transaction.

d) The petitioner also has hoardings and other spaces at its premises for putting up marketing banners or advertisement material and the petitioner uses the same for generating revenue. It is the petitioner’s case that during the financial year 2018-19 (Assessment Year 2019-20), the petitioner received a sum of Rs.1,10,33,116/- from Reliance and offered the same to tax, while filing Income Tax Return (hereafter “ITR”) for the said Assessment Year on October 31, 2019.

e) The petitioner’s aforesaid ITR was processed under Section 143 (1) of the Income Tax Act , 1961 (hereafter “the said Act of 1961”) and an intimation dated June 5, 2021 was furnished to the petitioner. However, the said ITR was not subjected to scrutiny assessment.

f) On March 30, 2025 a notice to show cause under Section 148A(1) of the said Act of 1961 was issued to the petitioner for the Assessment Year 2019-20 stating that the respondent revenue authorities had information suggesting that income chargeable to tax had escaped assessment within the meaning of Section 147 of the said Act of 1961. Along with the said notice the following material were supplied:-

i. An annexure which indicated that the information relied on by the revenue authorities had been obtained in “execution of Cycle 5 of CBDT approved Risk Management Strategy (Cycle-5) for the identification of potential cases for action u/s. 148/148A of the Income Tax Act , 1961”;

ii. Case Related Information Detail;

iii. Dissemination Note and iv. Certain other documents including excel sheets, relevant chapters of appraisal report pertaining to the search operation conducted in respect of Shri Ajay Mehta and Others and relevant statements recorded during such search operation.

g) By the said notice the petitioner was asked to show cause as to why a notice under Section 148 of the said Act of 1961 should not be issued.

h) The petitioner furnished its reply to the said notice under Section 148 A(1) of the said Act of 1961 on April 09, 2025 appending therewith - the details of payment by the Reliance for the financial year 2018-19 and payment details including UTR numbers and sample policy issued to customers. It