Petition challenging income tax assessment notice disposed of, rendered moot by no income addition

The Court disposed of the petition challenging the show cause notice under Section 148 of the Income Tax Act for reopening the income tax assessment for the assessment year 2016-17. The assessment was ultimately framed with no addition to the income, leading to the petition being rendered moot. As a result, the petition was disposed of, and the interim relief was vacated immediately.

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Issues:
Challenge to show cause notice under Section 148 of the Income Tax Act for reopening income tax assessment for the assessment year 2016-17.

Analysis:
The petitioner sought to challenge the show cause notice issued under Section 148 of the Income Tax Act, which aimed to reopen the income tax assessment for the assessment year 2016-17. The respondent provided reasons for the reopening, alleging that the petitioner benefitted from bogus LTCG/STCL related to a penny stock, resulting in an alleged escape of income amounting to Rs. 79,88,004. The petitioner objected to the reassessment proceeding and approached the Court apprehending that the respondent might frame the assessment without disposing of the objection. The prayers in the petition included quashing the impugned notice, staying its implementation, and seeking other just and proper relief. The Court issued notice to the respondents and an interim order was passed. The respondent filed an affidavit-in-reply denying the allegations and contending that the prescribed procedure had not been completed, making the petition premature. The respondent also argued that the grounds against the reopening of assessment were not sustainable.

The Court heard arguments from both parties, where the petitioner was represented by Senior Advocate Mr. Tushar Hemani and advocate Ms. Vaibhavi Parikh, while the respondent authority was represented by Senior Standing Counsel Mr. Varun Patel and Standing Counsel Mr. Dev Patel. Attention was drawn to an order received through email by the assessee regarding the assessment year, showing the total income as nil. It was noted that this information was no longer available on the website, possibly due to the interim order granted in favor of the petitioner. The assessment was ultimately framed with no addition made to the income, favoring the petitioner and rendering the cause of the petition moot. Consequently, the petition was disposed of, and the interim relief was vacated immediately.

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