2023 (10) TMI 564 - HC - Income Tax

Assessing authority under s.148A(d) limited to existence of information; substantive issues reserved for s.148 reassessment and s.147 proceedings

Vivek Saran Agarwal Versus Union of India And 3 Others

HC held that the assessing authority's decision under s.148A(d) is confined to whether information exists suggesting escaped income; substantive merits ... Reopening of assessment - Validity of order u/s 148A(d) - assessee has not offered his unaccounted unexplained income for taxation purpose in his return of income - HELD THAT:- Under the scheme of the Act a detailed procedure has been provided under Section 148 for issuance of notice whereafter the assessing authority has to determine, in the manner specified, whether income has escaped assessment and the defence of assessee, on all permissible grounds, remains open to be pressed at such stage. The ultimate determination made by the assessing authority under Section 147 for reassessment is otherwise subject to appeal under Section 246-A of the Act. Merits of the information referable to Section 148A thus remains subject to the reassessment proceedings initiated vide notice under Section 148 of the Act. It is for this reason that issues which require determination at the stage of reassessment proceedings and in respect of which departmental remedy is otherwise available are not required to be determined at the stage of decision by the assessing authority under Section 149A(d). The scope of decision under Section 148A(d) is limited to the existence or otherwise of information which suggests that income chargeable to tax has escaped assessment. Thus, in our opinion, the impugned order under Section 148A(d) of the Act and notice under Section 148 would not warrant any interference under Article 226 of the constitution of India as challenge to such order would be available to an assessee while challenging the order passed in reassessment proceedings consequent to the notice issued under Section 148 of the Act. Issues involved:The writ petition challenges the order passed by the Assessing Officer under Section 147 read with Section 144-B of the Income Tax Act, 1961 for the Assessment Year 2015-16, assessing a sum as annual income and raising a tax demand against the petitioner. The challenge also extends to the consequential notice issued under Section 148 of the Income Tax Act, 1961.Analysis:The petitioner contended that the reassessment proceedings are unwarranted as the assessment had already been completed under Section 143(3) of the Act, and no income had escaped assessment due to failure to disclose material facts. The petitioner argued against a change of opinion in the reassessment and challenged the jurisdiction of the Assessing Officer under Section 149(1)(b).The Revenue, represented by counsels Mahajan and Gupta, justified the reassessment by citing incriminating documents found during a search operation, indicating the petitioner's involvement in long-term capital gains transactions. The Assessing Officer considered the objections raised by the petitioner but found them unsatisfactory, leading to the conclusion that income had indeed escaped assessment.In their judgment, the Court upheld the Assessing Officer's decision, emphasizing that the detailed adjudication on the information available with the Assessing Officer at the stage of passing the order under Section 148A(d) is not required. The Court clarified that the ultimate determination of reassessment remains subject to appeal, and the scope of decision under Section 148A(d) is limited to whether income chargeable to tax has escaped assessment.The Court referred to a previous Apex Court decision to support its stance that any challenge to the order passed under Section 148A(d) should be raised during the reassessment proceedings. Consequently, the Court found no merit in the challenge to the order and notice issued by the Assessing Officer, dismissing the writ petition.In conclusion, the Court dismissed the writ petition, stating that no interference was warranted, and no costs were imposed.