2024 (1) TMI 368 - HC - Income Tax

Assessment reopening valid under IT Act Section 147; Section 148A(b) info requirements upheld

Chaturbhuj Gattani and Saroj Gattani Versus Income -Tax Officer, Rajasthan Principal Commissioner Of Income Tax, Jodhpur-1

Chaturbhuj Gattani and Saroj Gattani Versus Income -Tax Officer, Rajasthan Principal Commissioner Of Income Tax, Jodhpur-1 - [2024] 468 ITR 295 (Raj), ... Issues Involved:1. Challenge to orders under Section 148A(d) and notices under Section 148 of the Income Tax Act.2. Alleged contravention of principles of natural justice.3. Non-supply of material and documents relied upon by the Jurisdictional Authority.4. Interpretation and application of Sections 147, 148, and 148A of the Income Tax Act.Summary:Challenge to Orders and Notices: The petitioners challenged the orders dated 28.3.2023 and 29.3.2023 passed by the Income Tax Officer, Nagaur under Section 148A(d) of the Income Tax Act, 1961, and the consequential notices under Section 148 of the IT Act. The petitioner, a proprietor of M/s Tirumala Enterprises, had declared an income of INR 3,13,390/- for the assessment year 2019-20.Principles of Natural Justice: The petitioners argued that the impugned orders and notices were in contravention of the principles of natural justice, as the Jurisdictional Authority did not supply complete material and documents relied upon by the respondent-department. They cited the Supreme Court's direction in Union of India vs. Ashish Agarwal, which mandates that the Assessing Officer must submit all information and material relied upon by the Revenue to the assessee.Non-supply of Material and Documents: The petitioners contended that the Jurisdictional Authority did not provide specific particulars of alleged fake entities, such as their names, invoice numbers, addresses, and GST registration. They emphasized that the Jurisdictional Authority relied heavily on the report of the DDIT/ADIT (Inv.), Udaipur, which was not supplied to them. The Division Bench of this Court in Micro Marbles Private Limited vs. Office of the Income Tax Officer and the Delhi High Court in Charu Chains and Jewels Pvt. Ltd. vs. Assistant Commissioner of Income Tax had held that the material relied upon for initiating proceedings under Section 148 must be supplied to the assessee.Respondent's Argument: The respondents argued that the information relied upon by the Jurisdictional Authority was supplied to the petitioners, and the impugned orders and notices were passed in accordance with the law. They cited decisions of the Division Benches of this Court in Jugal Kishore Lohiya vs. Principal Chief Commissioner of Income Tax and M/s Chetak Enterprises Ltd. vs. The Assistant Commissioner of Income Tax to support their contention.Legal Provisions and Interpretation: The court quoted Sections 147, 148, and 148A of the IT Act, emphasizing that the requirement for the Assessing Officer to have 'reason to believe' has been replaced by the receipt of information suggesting that income chargeable to tax has escaped assessment. The court held that Section 148A(b) mandates only the supply of information to the assessee, not the material on which the Assessing Officer formed a prima facie opinion. The court found support from judgments of the High Courts of Allahabad and Madhya Pradesh, which held that the Assessing Officer is not obliged to supply material/evidence at the stage of issuing a notice under Section 148A(b).Conclusion: The court dismissed the writ petitions, holding that the Jurisdictional Authority had complied with the requirements of Section 148A(b) by supplying the necessary information. The petitioners were free to raise their defense before the Jurisdictional Authority in the proceedings under Section 148 of the IT Act.