Legality of Notice to Reopen Assessment Upheld, Writ Petition Dismissed

The court upheld the legality of the notice issued under Section 148 and the order rejecting the petitioner's objection regarding the reopening of assessment for A.Y. 2016-17 under the Income Tax Act. It dismissed the writ petition, allowing the assessing authority to proceed with reassessment based on information obtained from the Investigation Wing. The judgment emphasized the necessity of tangible material for reopening assessments and supported the authority's decision to issue the notice under Section 148.

---

---

Issues:
Challenge to order rejecting objection to reopening of assessment for A.Y. 2016-17 under Section 147/148 of Income Tax Act.

Analysis:

Issue 1: Reopening of Assessment
The petitioner challenged the notice dated 30.03.2021 under Section 148 of the Income Tax Act, 1961, based on information from a search conducted at M/s Celebrations City Projects (P) Ltd. The petitioner argued that proceedings should be initiated under Section 153C of the Act. The assessing authority justified the reopening based on cash payments made by the petitioner for purchase of units/shops in Red Mall, Ghaziabad. The authority believed there was escapement of income and issued the notice under Section 148. The court noted that no assessment was made for A.Y. 2016-17 and held that the notice and order were legal as per Explanation 2(b) of Section 147.

Issue 2: Legality of Notice and Order
The court examined the reasons recorded by the assessing authority, emphasizing the importance of tangible material for reopening assessments. The authority's decision was based on information from the Investigation Wing, and the court cited relevant case laws supporting the use of such information for issuing notice under Section 148. The court also analyzed Section 153C(1) of the Act, emphasizing that the reason to believe recorded by the assessing authority was not based on seized books or documents.

Conclusion:
The court found no illegality in the notice issued under Section 148 or in the order rejecting the petitioner's objection. The court dismissed the writ petition, allowing the assessing authority to proceed with reassessment in accordance with the law. The judgment highlighted the importance of tangible material for reopening assessments and upheld the legality of the notice and order based on the information available from the Investigation Wing.

---