Tax Notice Quashed: Court Demands Evidence, Hearing Before Reissuing Order on Alleged Losses Under Income Tax Act. The HC quashed the impugned order and notice issued under Sections 148 and 148A(d) of the Income Tax Act, 1961, deeming them illogical and unsupported by ...
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Tax Notice Quashed: Court Demands Evidence, Hearing Before Reissuing Order on Alleged Losses Under Income Tax Act.
The HC quashed the impugned order and notice issued under Sections 148 and 148A(d) of the Income Tax Act, 1961, deeming them illogical and unsupported by evidence. The HC directed the AO to disclose details of alleged losses and ensure a personal hearing for the petitioner before issuing a new order, preserving all parties' rights and contentions.
Issues involved: The issues involved in the judgment are the jurisdiction of an order passed under Section 148A(d) of the Income Tax Act, 1961 and the legality of a notice issued under Section 148 proposing to reopen the assessment for Assessment Year 2019-2020.
Details of the judgment:
1. The petitioner challenged an order and notice issued under the Income Tax Act, claiming them to be without jurisdiction, illegal, and arbitrary.
2. The petitioner, a publicly listed company, declared a loss for AY 2019-2020 and merged with two other entities in the previous financial year as per the National Company Law Tribunal's order.
3. The petitioner's case was selected for scrutiny during search and seizure proceedings, and the assessment was completed under Section 143(3) of the Act. The petitioner has challenged this assessment order before the Commissioner of Income Tax (Appeals).
4. The petitioner received a notice alleging fictitious losses based on information from an investigation. The petitioner responded, explaining the actual profits and losses incurred.
5. The Assessing Officer passed an order under Section 148A(d) alleging income escapement based on the initial notice, despite the petitioner's evidence to the contrary.
6. The High Court found the order under Section 148A(d) illogical as the basis for the notice was disproved by the petitioner's evidence. The Principal Commissioner of Income Tax's sanction was questioned for not considering the petitioner's submissions.
7. The High Court quashed the impugned order and notice, directing the AO to provide details of the alleged losses before passing a fresh order, ensuring a personal hearing for the petitioner.
8. The High Court kept all rights and contentions of the parties open, disposing of the petition.
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