Court quashes Assessment Order, emphasizes procedural fairness, grants access to SEBI report

The High Court quashed the Assessment Order and remanded the matter back to the Assessing Officer, directing the provision of the SEBI report to the Petitioner. The Petitioner was allowed to file objections within two weeks of receiving the report, with the Assessing Officer required to dispose of them within three weeks after a personal hearing. The final Assessment Order was to be issued within four to eight weeks if objections were prejudicial. The Court emphasized procedural fairness and the Petitioner's right to access relevant information for the assessment process, without making any substantive findings on the case.

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Issues:
The issues involved in the judgment are challenging the notice issued under Section 148 of the Income Tax Act, 1961 for re-assessment of income for Assessment Year 2017-18, and challenging the Assessment Order passed under Section 147 r/w. Section 144B of the Act without jurisdiction.

Challenging the Notice under Section 148:
The Petitioner challenged the action of Respondent No. 1 in issuing a notice dated 31st March 2021 under Section 148 of the Income Tax Act, seeking to re-assess the Petitioner's income for Assessment Year 2017-18. The Petitioner contended that the order was passed without jurisdiction as no separate order disposing of the Petitioner's objections to the notice had been issued.

Reasons for Re-opening Assessment under Section 147:
The reasons for re-opening the assessment under Section 147 of the Act were made available to the Petitioner, citing reliance on a SEBI Investigation. The investigation revealed alleged doctored transactions in the scrip of Syncom Formulations Limited to book bogus LTCG and loss, with the Petitioner being a beneficiary. The Petitioner's counsel requested a copy of the SEBI report, which was not provided by Respondent No. 1 despite repeated requests. The Petitioner argued that the basis for believing that the Petitioner's income had escaped assessment was an alleged SEBI Investigation report, which the Petitioner had the right to access.

Judgment and Directions:
The High Court quashed and set aside the Assessment Order dated 31st March 2022, remanding the matter back to the Jurisdictional Assessing Officer (JAO). The JAO was directed to provide the Petitioner with a copy of the SEBI report relied upon within two weeks. The Petitioner was given the opportunity to file further objections to the notice within two weeks of receiving the report. The JAO was instructed to dispose of the objections within three weeks after a personal hearing for the Petitioner. If the order disposing of objections was prejudicial, the final Assessment Order would be passed within four to eight weeks, depending on the circumstances.

Disposition and Clarification:
The petition was disposed of with no order as to costs. The Court clarified that no observations were made on the merits of the matter, focusing solely on the procedural aspects and the right of the Petitioner to access relevant information for the assessment process.

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