High Court quashes tax notice and order, emphasizing need for accurate allegations. Time-barred proceedings.

The High Court allowed the writ petition, setting aside the show cause notice issued under Section 148A(b) of the Income Tax Act, the order passed under Section 148A(d), and the notice issued under Section 148 for the Assessment Year 2017-18. The court found discrepancies and mistakes in the notices and orders, emphasizing the need for accurate and specific allegations for the assessee to respond adequately. The court concluded that the proceedings were time-barred under Section 149(1)(b) of the Act due to the alleged escaped income being below the threshold amount.

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Issues Involved:
Challenging notice under Section 148 of the Income Tax Act, 1961; order passed under Section 148A(d) of the Act; Notice under Section 148A(b) of the Act; Barred by limitation under Section 149(1)(b) of the Act.

Challenging Notice under Section 148 of the Income Tax Act, 1961:
The petitioner filed a writ petition challenging the notice issued under Section 148 of the Income Tax Act, 1961, dated 25th June, 2021, along with subsequent notices and orders for the Assessment Year 2017-18. The petitioner contended that the order passed under Section 148A(d) of the Act and the notice issued under Section 148A(b) of the Act were based on distinct grounds. The petitioner argued that the impugned proceedings were time-barred under Section 149(1)(b) of the Act as the alleged income that escaped assessment was less than the threshold amount of Rs. 50,00,000. The court noted discrepancies in the descriptions, sale considerations, and circle rates of the properties mentioned in the notices and orders, highlighting a mistake in the proceedings initiated by the Assessing Officer.

Order Passed under Section 148A(d) of the Act:
The court observed that the Assessing Officer had erroneously proceeded with the notice under Section 148A(b) of the Act, despite realizing the mistake in the description of the property. The court found that the information provided to the Assessing Officer was related to a different violation under the Act, not the non-declaration of long-term capital gains as alleged in the notice. Referring to a previous judgment, the court emphasized that foundational allegations missing in the notice could not be rectified through a supplementary notice. It was highlighted that the purpose of issuing the notice was to inform the assessee of the allegations with sufficient particulars for a defense. The court concluded that the petitioner had responded to the allegations in the notice adequately, while the Assessing Officer had been negligent in incorporating incorrect information.

Notice under Section 148A(b) of the Act:
The court noted discrepancies between the properties mentioned in the notice under Section 148A(b) of the Act and the subsequent order under Section 148A(d) of the Act. It was highlighted that the Assessing Officer had committed a mistake in issuing the notice and failed to rectify it during the proceedings. The court emphasized that the impugned show cause notice was contrary to the record, as the information received was different from the allegations made in the notice. Citing settled law, the court held that the notice must contain accurate and specific allegations to enable the assessee to respond adequately. Consequently, the court set aside the show cause notice issued under Section 148A(b) of the Act, along with the order passed under Section 148A(d) of the Act and the notice issued under Section 148 of the Act for the Assessment Year 2017-18.

Barred by Limitation under Section 149(1)(b) of the Act:
The court addressed the issue of the proceedings being barred by limitation under Section 149(1)(b) of the Act due to the alleged escaped income being less than the prescribed threshold. It was noted that the proceedings could only be initiated after three years from the end of the relevant assessment year if the amount alleged to have escaped assessment was Rs. 50,00,000 or more. The court considered this aspect in conjunction with the discrepancies and mistakes in the notices and orders, ultimately setting aside the impugned proceedings for the Assessment Year 2017-18.

In conclusion, the High Court allowed the writ petition, setting aside the show cause notice issued under Section 148A(b) of the Act, the order passed under Section 148A(d) of the Act, and the notice issued under Section 148 of the Act for the Assessment Year 2017-18. The court granted liberty to the respondents-revenue to take further steps in accordance with the law, with the petitioner retaining the right to seek remedies if necessary.

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