Court quashes reassessment based on false info, stresses accountability, imposes costs, and clarifies non-interference.

The Court found the initiation of reassessment proceedings under false information and without jurisdiction. Emphasizing accountability, the Court quashed the notice, order rejecting objections, and reassessment order. It imposed a cost on the respondents, directed the implementation of a verification mechanism for accurate data, and clarified the non-interference in Assessing Officers' quasi-judicial functions without statutory permission. The writ petition was allowed with costs, ensuring accountability and preventing harassment of assessees.

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Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act.
2. Validity of the Re-assessment Order for the Assessment Year 2017-18.
3. Constitutionality of the amendment to the Income Tax Act, 1961, omitting Sub-Section 9 of Section 144B.
4. Validity of the order issued under Section 151 of the Income Tax Act.

Issue-wise Analysis:

1. Validity of the Notice Issued Under Section 148 of the Income Tax Act:
The petitioner challenged the notice dated 31.03.2021 issued under Section 148 of the Income Tax Act, alleging that the information on which the notice was based was incorrect. The petitioner argued that no cash deposit of Rs.13,67,24,000/- was made in the Bank of Baroda as claimed by the respondents. The Court found that the reason to believe for initiating proceedings was unfounded and false, as the actual cash deposit was Rs.3,41,81,000/- in Union Bank of India, not Bank of Baroda. The Court held that the initiation of proceedings and the reassessment order were examples of highhandedness, arbitrary actions, and abuse of power by the respondents.

2. Validity of the Re-assessment Order for the Assessment Year 2017-18:
The petitioner argued that the reassessment order dated 31.03.2022 was made in gross violation of law and principles of natural justice. The Court found that the respondents did not consider the petitioner's objections or the evidence provided. The reassessment order was passed without any discussion or reference to evidence regarding the alleged cash deposit. The Court concluded that the reassessment order was passed in complete breach of principles of natural justice and was arbitrary and illegal.

3. Constitutionality of the Amendment to the Income Tax Act, 1961:
The petitioner initially sought a declaration that the amendment to the Income Tax Act, 1961, omitting Sub-Section 9 of Section 144B, was unconstitutional. However, this relief was not pressed by the petitioner's counsel and was subsequently deleted from the petition.

4. Validity of the Order Issued Under Section 151 of the Income Tax Act:
The petitioner also challenged the order dated 30.03.2021 issued under Section 151 of the Income Tax Act. The Court found that the information on which the order was based was incorrect and that the entire proceedings under Section 147/148 were without jurisdiction. The Court emphasized that the respondents acted arbitrarily and abused their power, leading to the initiation of reassessment proceedings based on false information.

Key Findings and Directions:
1. The Court found that the reassessment proceedings were initiated on false information and were without jurisdiction.
2. The Court emphasized the need for accountability of the officers who fail to observe statutory provisions or act in breach of principles of natural justice.
3. The Court directed the respondents to develop and implement a mechanism within one month to ensure that information fed into the department's database is verified and accurate.
4. The Court imposed a cost of Rs.50,00,000/- on the respondents to be deposited in the Prime Minister National Relief Fund within three weeks.
5. The Court directed the issuance of a circular clarifying that the quasi-judicial function of Assessing Officers should not be interfered with by higher authorities unless permitted by the Act.

Conclusion:
The writ petition was allowed with costs, and the impugned notice, order rejecting objections, and reassessment order were quashed. The Court issued several directions to ensure accountability and prevent harassment of assessees due to departmental errors.

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