High Court sets aside notices under Section 148A & 148, emphasizes proper allegations, and grants liberty for lawful proceedings.

The High Court allowed the petition, setting aside the impugned notices and orders issued under Section 148A and Section 148. The Court granted liberty to the respondent to proceed lawfully and allowed the petitioner to pursue remedies as per the law. The judgment emphasized the importance of proper incorporation of allegations in show cause notices and the need for assessing officers to provide opportunities for respondents to address all issues raised.

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Issues:
The judgment involves the quashing of impugned notices and orders under Section 148A and Section 148 based on allegations of liability towards a single party and inadmissible expense claims.

Issue 1: Allegation of Liability towards a Single Party
The petitioner sought the quashing of impugned notices and orders on the ground that the liability towards a single party, M/s Dholagiri Enterprises, was not properly incorporated in the show cause notice despite being within the knowledge of the respondent. The petitioner argued that no income was alleged to have been escaped based on this liability. Furthermore, the order dated 31.03.2023 did not reference the petitioner's reply given on 26.03.2023. Citing a judgment from the Delhi High Court, it was emphasized that foundational allegations cannot be added through supplementary challans. The Court allowed the petition, setting aside the impugned notices and orders, while granting liberty to the respondent to proceed in accordance with the law.

Issue 2: Inadmissible Claim of Expense Value
The petitioner also challenged the impugned notices and orders on the ground that there was no allegation of escaped income related to the inadmissible claim of expense value. The petitioner highlighted a case from the Calcutta High Court where an assessing officer abandoned an initial allegation and proceeded with a fresh ground without giving the assessee an opportunity to respond. The Court observed that the impugned order was passed without allowing the assessee to address the new issue. The petition was allowed, and the impugned notices and orders were set aside, with liberty granted to the respondent to take further steps as per the law.

Conclusion:
The High Court allowed the petition, setting aside the impugned notices and orders issued under Section 148A and Section 148. The Court granted liberty to the respondent to proceed lawfully and allowed the petitioner to pursue remedies as per the law. The judgment emphasized the importance of proper incorporation of allegations in show cause notices and the need for assessing officers to provide opportunities for respondents to address all issues raised.

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