2026 (2) TMI 373 - HC - Income Tax

Reopening assessment under Section 147: concise information, not full records, suffices; notice sustained and petition dismissed

Reopening of assessment was contested on sufficiency of information supplied with the notice under the pre-2021 provision. The court held that ... Reopening of assessment u/s 147 - reasons to believe - burden to prove - basic contention that while issuing notice, the AO had not provided relevant information to the petitioner - HELD THAT:- A perusal of sub-section (1) of Section 148A of the Act of 1961 (as it stood before the amendment vide Finance Act, 2021) reveals that it simply provides for information suggesting income chargeable to tax has escaped assessment is to be supplied along with the notice. Information according to this Court means a concise narration or detail about the conclusion or inference, which the AO has drawn from the material available with him. Such views of ours is fortified, if we look at the provision contained in sub-section (3) of Section 148A of the Act of 1961, where the legislation has used the expression “on the basis of material available on record”. On a careful reading of sub-section (3) of Section 148 of the Act of 1961, it is apparent that the framers of law have carved out a clear distinction between the material available on record and the information to be supplied. Supply of information does not necessarily mean that copies of the entire material available on record have to be supplied to the petitioner or assessee along with notice under Section 148A(1) or 148A(b), as the case may be. If the argument of the petitioner as advanced is accepted and it is held that every material has to be supplied to the assessee along with the notice under Section 148A(1) or Section 148A(b) (as applicable from time to time), it will result in protraction of the proceeding and giving assessee unwarranted opportunity to defend the transactions, which he had withheld while filing the return of income by way of getting the relevant material or defence manufactured. Needless to observe that the burden is always on the AO to prove that the assessee has indulged into some transactions out of books, by way of cogent evidence and material. No Jurisdictional error in the impugned notice and the proceedings undertaken by the respondent. The petition is, therefore, dismissed. Issues: Whether the notice dated 20.03.2024 issued under Section 148A(b) (precursor to proceedings under Section 148) and the consequent initiation of reassessment proceedings are vitiated for want of adequate information or jurisdictional error.Analysis: The notice identifies two transaction amounts alleged to be bogus/fictitious and supplies a concise narration of the conclusions drawn from material on record; such narration constitutes the 'information' required by Section 148A(1). Section 148A(3) (and the distinction drawn with material available on record) permits provision of information without necessarily furnishing copies of all underlying documents at the notice stage. Requiring production of the entire record with the notice would prolong proceedings and afford the assessee an opportunity to manufacture defences; nonetheless the Assessing Officer retains the burden to establish, by cogent evidence, that income has escaped assessment. The facts show the notice contained sufficient information to commence the prescribed process and do not disclose a jurisdictional defect.Conclusion: The notice under Section 148A(b) and the initiation of proceedings under Section 148 are valid; the writ petition challenging the notice is dismissed.