Court orders Revenue to file counter affidavit within six weeks, reassessment on hold pending further orders

The Court directed the Revenue to file a counter affidavit within six weeks, with a possible rejoinder affidavit, before the next hearing scheduled for 01st September, 2022. The assessing officer can proceed with the reassessment/assessment order but is instructed not to implement it until further orders are issued.

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Issues:
Challenging notice under Section 148A(b) of the Income Tax Act, 1961, order under Section 148A(d), and notice under Section 148 for Assessment Year 2018-19.

Analysis:
The writ petition challenges a notice dated 11th March, 2022 issued under Section 148A(b) of the Income Tax Act, 1961, an order dated 29th March, 2022 issued under Section 148A(d), and a notice dated 30th March, 2022 issued under Section 148 for the Assessment Year 2018-19. The petitioner contends that the interest income from Non-Convertible Debentures (NCDs) was not appropriately offered to tax due to mischaracterization of income. However, the order issued under Section 148A(d) categorized the interest income as fictitious and in the nature of dividend payment by Genpact India Pvt. Ltd. (GIPL), alleging that the income had escaped assessment. The petitioner argues that the impugned notice and order were passed without clarifying the nature of the alleged mischaracterization of income, violating principles of natural justice.

The respondents argue that the petitioner was aware of the Revenue's stance as a draft assessment order for the previous assessment year had similar allegations. In response, the petitioner's counsel highlights that the impugned order categorizing the income as dividend income for the first time would be exempt in the hands of the assessee, and any liability for dividend distribution tax would fall on GIPL. The Court deems the matter necessitates examination and directs the Revenue to file a counter affidavit within six weeks, allowing a rejoinder affidavit if necessary before the next hearing date scheduled for 01st September, 2022. Although the assessing officer can proceed with the reassessment/assessment order, the Court instructs that it should not be implemented until further orders are issued.

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