Court quashes tax notice based on retracted statement, rules in favor of petitioner

The court granted the petitioner's request for a writ of certiorari to quash the notice issued under Section 148 of the Income Tax Act for the assessment year 2017-18. The court found that the notice was solely based on the husband's retracted statement about income suppression, lacking any other justification for reopening the assessment. Similarly, the court set aside the order rejecting objections and invoking Section 147 of the Act, as the retracted statement did not provide sufficient grounds for reassessment. Ultimately, the court ruled in favor of the petitioner, setting aside both the impugned order and notice.

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Issues:
1. Writ of certiorari to quash notice under Section 148 of the Income Tax Act, 1961 for the assessment year 2017-18.
2. Writ of certiorari to quash the order rejecting objections and challenging the invocation of Section 147 of the Act.

Analysis:
Issue 1: The petitioner sought a writ of certiorari to quash the notice passed under Section 148 of the Income Tax Act, 1961 dated 31.03.2021 for the assessment year 2017-18. The Senior Counsel for the petitioner argued that the notice was issued to reassess the petitioner's income, and objections were filed regarding the reasons for reopening the proceedings, which were rejected. The Department relied on a statement made by the petitioner's husband declaring a suppression of income, which was later retracted. The court observed that the sole reason for initiating the proceedings was the husband's statement, and as there was no other justification for reopening the assessment, the court set aside the impugned order and notice.

Issue 2: Additionally, the petitioner sought a writ of certiorari to quash the order rejecting objections and challenging the invocation of Section 147 of the Act. The court noted that the husband's retracted statement was the only basis for reopening the assessment, and in similar circumstances, the court had previously observed that the retraction resulted in the absence of material to warrant reopening the case. Consequently, as there was no material available on record for initiating proceedings under Section 148, the court set aside the impugned order and notice, thereby ruling in favor of the petitioner.

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