Tax Reassessment Order Overturned Due to Lack of Evidence and Fair Hearing; Fresh Assessment Ordered.

The HC set aside the order and notice issued under Section 148A(d) and Section 148 of the Income Tax Act, 1961, for AY 2019-20, concerning a purported bogus loan from Aneri Fincap Ltd. The court found insufficient material to justify the reassessment, noting the absence of a personal hearing for the petitioner. It directed the Assessing Officer (AO) to conduct a fresh assessment, ensuring a personal hearing and disclosure of any material used for reassessment, allowing the petitioner to respond and ensuring a speaking order is issued. The writ petition was disposed of with these directions.

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Issues:
The judgment concerns a challenge to an order passed under Section 148A(d) of the Income Tax Act, 1961 and a consequential notice issued under Section 148 of the Act for Assessment Year (AY) 2019-20.

Challenge to Order and Notice:
The petitioner challenged the order alleging that it is a beneficiary of a bogus loan provided as an accommodation entry by Aneri Fincap Ltd. controlled by Mr. Rajesh G Mehta. The petitioner disputed the allegation, stating that there was no reference to such entry in Mr. Mehta's statement. The petitioner admitted receiving an unsecured loan from AFL but claimed it was genuine, supported by the repayment in the succeeding AY and compliance with tax deduction provisions.

Reassessment Proceedings and Material Consideration:
Reassessment proceedings were initiated against the petitioner following a search and seizure action against "Oneworld group entities." The statement of Mr. Mehta formed the basis for focusing on AFL's loan to the petitioner. The court noted the lack of clarity on whether the AO had sufficient material to conclude that income had escaped assessment, especially considering the absence of personal hearing for the petitioner.

Legal Considerations and Order:
The court observed that the search was not against the petitioner, and the period in question was FY 2018-19. It acknowledged the relaxation of law rigour by CBDT circulars, incorporating principles of natural justice. Consequently, the court set aside the order and notice, directing the AO to conduct a fresh assessment after providing a personal hearing to the petitioner and furnishing any material triggering the reassessment. The petitioner would have the opportunity to respond, and a speaking order would be issued.

Conclusion:
The writ petition was disposed of with the above directions, allowing for a fair opportunity for the petitioner to address the allegations and participate in the reassessment process.

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