Reassessment notice invalid when relied-upon material is not disclosed, defeating the assessee's effective opportunity to reply

Reassessment under Section 148A was vitiated where the Assessing Officer relied on search and survey material but did not furnish the underlying documents to the assessee before issuing the show-cause notice and passing the order. The Court held that withholding the relied-upon material denied an effective opportunity to respond, undermining the pre-reassessment safeguard and the procedure envisaged in the post-Ashish Agarwal framework. As the statutory process was not followed in substance, the order under Section 148A(d) and the consequential notice under Section 148 were quashed.

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Issues: Whether reassessment proceedings under Section 148A(b), Section 148A(d) and Section 148 of the Income-tax Act, 1961 were vitiated because the Assessing Officer did not furnish the material relied upon while issuing the show-cause notice and passing the order.

Analysis: The notice under Section 148A(b) was founded on material arising from search and survey proceedings, but the assessee's request for the underlying documents and details was not acceded to. The absence of disclosure of the relied-upon material deprived the assessee of an effective opportunity to answer the notice, defeating the purpose of the pre-reassessment procedure. The requirement of supplying such material was treated as consistent with the directions in the post-Ashish Agarwal reassessment framework and with the procedural safeguards embedded in the Act.

Conclusion: The reassessment proceedings were held unsustainable for breach of the prescribed procedure, and the order under Section 148A(d) together with the notice under Section 148 was quashed and set aside.

Ratio Decidendi: Where reassessment is initiated on the basis of material relied upon by the Assessing Officer, failure to furnish that material to the assessee before completing the Section 148A procedure vitiates the proceedings for denial of an effective opportunity of reply.

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