Court sets aside order & notice due to non-supply of assessment material, remits matter to AO for fair opportunity.

The court set aside the order dated 25.07.2022 and the consequential notice issued under Section 148 concerning Assessment Year 2016-2017 due to the non-supply of material forming the basis for assessment/reassessment proceedings. The matter was remitted to the Assessing Officer (AO) with directions to provide the material to the petitioner within three weeks, allowing a further three weeks for response. The petitioner's authorized representative was to have a personal hearing before the AO proceeds further. The writ petition was disposed of with instructions for the AO to ensure a fair opportunity for the petitioner to respond effectively.

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Issues involved:
1. Validity of the order dated 25.07.2022 under Section 148A(d) of the Income Tax Act, 1961 and the consequential notice issued under Section 148 concerning Assessment Year 2016-2017.
2. Timeliness of passing the order under Section 148A(d) of the Act.
3. Non-supply of material forming the basis for assessment/reassessment proceedings.

Analysis:

Issue 1: Validity of the order dated 25.07.2022
The writ petition challenged the order passed under Section 148A(d) of the Income Tax Act, 1961, and the consequential notice issued concerning Assessment Year 2016-2017. The assessing officer had identified unsecured loan transactions totaling Rs. 2.7 crores among three entities, suspecting them to be accommodation entries due to common directors, struck-off company names, and lack of response to summons. The petitioner sought information and material from the AO, indicating a willingness to respond further based on the provided details. However, the AO did not furnish the gathered information during the proceedings. The petitioner contended that the order should be set aside as it was passed after the prescribed time under Section 148A(d) had lapsed.

Issue 2: Timeliness of passing the order
The petitioner argued that the order should have been passed within one month from the end of the month in which the initial reply was submitted. The respondent contended that the reply was partial, granting an extended time for a final response, thus justifying the order's timing on 25.07.2022. The Court agreed with the respondent's interpretation, stating that the one-month timeframe should commence from the extended deadline, allowing the order to be passed within the stipulated timeframe.

Issue 3: Non-supply of material
The Court acknowledged the requirement, as per the Supreme Court judgment in Union of India v. Ashish Aggarwal, to furnish underlying information/material forming the basis for assessment/reassessment proceedings to the petitioner. Consequently, the Court set aside the impugned order dated 25.07.2022 and the consequential notice, remitting the matter to the AO. The AO was directed to provide the material to the petitioner within three weeks of the judgment, allowing the petitioner a further three weeks to respond. Personal hearing was mandated for the petitioner's authorized representative before the AO proceeds further in accordance with the law.

In conclusion, the writ petition was disposed of with directions for the AO to comply with the furnishing of material and subsequent procedural steps, ensuring a fair opportunity for the petitioner to respond effectively.

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