Tax department bypassed mandatory approval before issuing section 148A notice, violating Supreme Court guidelines in Ashish Agarwal case

The Bombay HC stayed the operation of notices under sections 142(1), 148, and 148A pending further proceedings. The petitioner challenged the reopening of assessment under section 147, arguing that the Assessing Officer failed to obtain mandatory prior approval from the specified authority before issuing show cause notice under section 148A, as required by the Supreme Court's decision in Ashish Agarwal. The court found merit in the petitioner's contention that the procedure was arbitrary and violated statutory safeguards, particularly the requirement for prior approval at every stage of the reassessment process.

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Issues involved: Challenge to Notices and order issued by Assessment Authority under the Income Tax Act, 1961.

Summary:
The petitioner, Chairman and Managing Director of a company, challenged various Notices and orders issued by the Assessing Authority, including impugned Notices under different sections of the Income Tax Act. A survey was conducted at the petitioner's business premises in 2018, resulting in additional income offered for assessment voluntarily by the company. The Assessing Authority accepted the revised return in 2019. The petitioner contended that despite the CBDT Scheme mandating faceless reassessment proceedings, the Assessing Authority issued a Notice under Section 148A(b) without following the prescribed modality. The petitioner responded to the show cause notice, highlighting non-compliance with the Scheme and lack of source information. The Assessing Authority issued a Notice under Section 148 for reassessment, prompting the petitioner to file a detailed reply stating the cash sheets were bogus. The petitioner argued that the procedure followed by the Assessing Authority was arbitrary and illegal, as it did not adhere to the guidelines set by the Apex Court. The petitioner's request for a personal hearing was not granted, leading to a plea for staying the operation of the impugned Notices.

The counsel for the respondents contended that due procedure was followed by the Assessment Authority before initiating the action. The court granted leave to add the Assessment Unit as a respondent and stayed the operation of the impugned Notices until further proceedings. The matter was adjourned for further hearings.

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