2023 (2) TMI 969 - HC - Income Tax

Court overturns flawed tax notice, stresses accurate income reporting, fair hearing for petitioner.

The court set aside the impugned order and notices in a case challenging a notice under Section 148A(b) of the Income Tax Act, 1961, due to discrepancies ... Reopening of assessment u/s 147 - validity of Notice u/s 148A(d) - difference in amount mentioned in notice u/s 148A and case related details - HELD THAT:- In the Section 148A(b) notice, the amount mentioned is Rs. 60,41,400/- whereas in the case related information details, the amount mentioned is Rs. 42,18,000/-. This is despite the petitioner informing the Assessing Officer (AO) via communication dated 06.06.2022, that there is a discrepancy between what is stated in the Section 148A(b) notice and the input received from the insight portal. According to us, there has been no application of mind, and therefore, the impugned order and notices are set aside. AO will have liberty to take the next steps in the matter, albeit, as per law. Needless to state, if any such steps are taken, due opportunity of hearing will be accorded to the petitioner and/or his authorized representative. Clearly, in this situation, if the escaped amount is Rs 42,18,000/-, then the respondents/revenue would have to cross the hurdle of Section 149(1)(b). However, if the escaped income, according to the respondents/revenue, is Rs 60,41,400/-, the AO will have to furnish the material, on the basis of which he pegged the said amount as the escaped income chargeable to tax. We set aside the impugned order passed under Section 148A(d), and the consequent notice under Section 148, with liberty to the AO to commence proceedings afresh. Issues:Challenging notice under Section 148A(b) of the Income Tax Act, 1961; Order under Section 148A(d) and notice under Section 148; Challenge to instructions issued by CBDT; Discrepancy in amount mentioned in notices; Application of mind by Assessing Officer (AO); Opportunity of hearing to petitioner; Hurdle of Section 149(1)(b); Furnishing relevant material by AO.The judgment pertains to a writ petition challenging a notice issued under Section 148A(b) of the Income Tax Act, 1961, an order under Section 148A(d), and a consequent notice under Section 148 concerning Assessment Year (AY) 2016-2017. Additionally, the petitioner contested instructions issued by the Central Board of Direct Taxes (CBDT) but later chose not to press this prayer. The main issue highlighted was the discrepancy in the amount mentioned in the notices, with the petitioner pointing out the misalignment between the figures stated in the notice and the case-related information received. Despite the petitioner's communication to the Assessing Officer (AO) regarding this discrepancy, the AO proceeded with the same course and scaled down the amount of escaped income in the subsequent order under Section 148A(d).The court observed a lack of application of mind in the AO's actions and consequently set aside the impugned order and notices. The AO was granted liberty to take further steps in accordance with the law, ensuring due opportunity of hearing to the petitioner or their representative. The court emphasized the importance of the correct amount of escaped income, indicating that if it is Rs 42,18,000, the revenue would face hurdles under Section 149(1)(b), whereas if it is Rs 60,41,400, the AO must provide material to support this figure. Therefore, the impugned order and notice were set aside, with the AO permitted to commence proceedings afresh after furnishing relevant material/information.In conclusion, the writ petition and pending application were disposed of with the direction to set aside the impugned order and notice, allowing the AO to restart proceedings with the provision of necessary material. The judgment focused on ensuring a fair and lawful assessment process while addressing the discrepancies and lack of application of mind in the initial actions taken by the AO.