2026 (2) TMI 1314 - HC - Income Tax

Reopening assessments: AO must record reasons and consider taxpayer's Section 148A reply; failure renders reopening invalid.

Whether a reopening order under the Income-tax law is valid where the Assessing Officer purportedly did not consider the taxpayer's reply and recorded no ... Reopening of assessment - petitioner is a “Non-Filer” in respect of the said assessment year - live links between the proposition and the conclusion HELD THAT:- Although the AO has extracted the petitioner’s reply in verbatim, in the impugned order, yet not even one line has been spared by the AO that would evince that he has bestowed any consideration to the said reply. The ultimate conclusion of reopening of the petitioner’s case for re-assessment of his income for the assessment year 2021-22 is not based on any reason. It is settled that reasons are live links between the proposition and the conclusion but there is none in the case at hand. Last page records an abrupt conclusion that the petitioner’s case should be reopened without indicating why and how could the petitioner be still treated as a “Non-Filer” when the petitioner had (has) brought on record material to show that the petitioner had indeed filed his return of income for the relevant assessment year. The conclusion that the petitioner is “Non-Filer” despite a reply clearly indicating an Income Tax Return having been filed for assessment year 2021-22 itself can be nothing else but product of non-application of mind. Since the order impugned clearly evinces total non-application of mind, the same cannot withstand scrutiny under Article 226 of the Constitution of India. The order impugned and the consequential notice of even date u/s 148 are set aside. Assessee appeal allowed. Issues: Whether the order dated 20 June 2025 passed under Section 148A(3) of the Income-tax Act, 1961 (and consequential notice under Section 148) reopening assessment for AY 2021-22 is valid where the Assessing Officer purportedly did not consider the petitioner's reply and recorded no reasons.Analysis: The Court examined the impugned order to determine if the Assessing Officer applied his mind to the petitioner's reply to the Section 148A(1) show-cause notice and whether reasons were recorded to support the conclusion to reopen assessment. The order shows extraction of the petitioner's reply verbatim but lacks any statement or explanation indicating that the reply was considered or why the petitioner remained a 'Non-Filer' despite evidence of filing the return. Reasons link propositions to conclusions; their absence indicates total non-application of mind. The Court therefore analysed the order for compliance with the requirement of a reasoned decision in the context of reopening proceedings under the Income-tax Act, 1961 and found the impugned order legally deficient.Conclusion: The impugned order dated 20 June 2025 under Section 148A(3) and the consequential notice under Section 148, 1961 are set aside for total non-application of mind. The Assessing Officer is directed to reconsider the matter and pass a fresh reasoned order after considering the petitioner's reply in accordance with law.