2024 (5) TMI 231 - HC - Income Tax

Order under Section 148A(d) and sanction under Section 151 quashed for fresh additions made without application of mind

Bombay HC quashed the impugned order passed under Section 148A(d) and the sanction under Section 151, ruling for the assessee. The court found the AO ... Validity of reopening of assessment - Petitioner had not filed its ROI and no reply also has been filed against notice under Section 148A (a) - Valid approval u/s 151 provided or not? - another notice was issued u/s 148A (b) stating that the submissions made were not satisfactory and Petitioner failed to reconcile each and every entry in the notice with ITR filed by it - HELD THAT:- We agree with Petitioner contractual receipts and interest earned on securities have been raised for the first time in the impugned order passed under Section 148A (d) of the Act. Also, Petitioner, in the letter dated 14th April 2023, has explained the rent receipt and source and nature of foreign remittances and if the AO was not satisfied with the explanation, he ought to have, in the impugned order dated 20th April 2023, made out a case as to why he does not agree with the explanation given by Petitioner than making a bald and incorrect statement that Assessee has failed to demonstrate that these items have been disclosed. In the circumstance, in our view, the impugned order under Section 148A (d) of the Act has been passed without application of mind. It is obvious that even the sanction that is accorded under Section 151 of the Act, has been issued without application of mind. We say this because if only the Range Head or the PCIT had bothered to read the file together with the notices issued under Section 148A (b) of the Act, they would have not recommended or approved issuance of the notice under Section 148 of the Act. In our view, the impugned order cannot be sustained. The same is hereby quashed and set aside. Decided in favour of assessee. Issues Involved:The issues involved in this case are the validity of an order passed under Section 148A (d) and a notice issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2019-20, regarding the failure to file a return of income and the merger of entities.Summary:The petitioner challenged an order dated 20th April 2023 passed under Section 148A (d) and a notice issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2019-20. The petitioner had filed a return of income declaring taxable income, but received notices alleging failure to file the return under Section 139(1) of the Act due to a merger with another entity. Despite explanations provided by the petitioner, subsequent notices were issued, culminating in the impugned order dated 20th April 2023. The petitioner contended that the Assessing Officer failed to consider the explanations provided, leading to an incorrect assessment of undisclosed income.The Court noted that certain figures were raised for the first time in the impugned order, which the petitioner had explained in detail in their replies. The Court found that the impugned order was passed without proper application of mind, as evidenced by the lack of consideration given to the explanations provided by the petitioner. The Court held that the sanction under Section 151 of the Act was also issued without due consideration. Consequently, the Court quashed the impugned order dated 20th April 2023 and the notice issued under Section 148 of the Act on the same date.In conclusion, the Court ruled in favor of the petitioner, quashing the impugned order and notice, as they were deemed to be without jurisdiction, illegal, and arbitrary. The Court issued a Writ of Certiorari, setting aside the impugned order and notice, as well as the reassessment proceedings for Assessment Year 2019-20.