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 raised new additions (contractual receipts and interest on securities) despite the assessee's explanations and supporting letter; the order contained bald, incorrect statements and showed no application of mind. The HC also held the Range Head/PCIT approval was given without reading the record and the Section 148 notice was therefore unsustainable. The impugned proceedings were set aside.

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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.

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