Section 148A inquiry sequence is essential; later reassessment steps cannot cure failure to conduct the approved preliminary inquiry

Section 148A of the Income-tax Act, 1961 requires the Assessing Officer, where an inquiry under clause (a) is proposed, to obtain prior approval from the specified authority and conduct that inquiry before issuing notice under clause (b). The notice under section 148A(b) must therefore be based on the information and results of the inquiry, if any. Subsequent proceedings under section 148A(d) and issuance of notice under section 148 do not cure failure to conduct an approved inquiry at the prescribed stage. The legal framework consequently treats compliance with the inquiry sequence as essential to reassessment initiation.

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Issues: Whether a notice under section 148A(b) of the Income-tax Act, 1961 and the consequential order under section 148A(d) and notice under section 148 are sustainable when no inquiry under section 148A(a) is conducted despite prior approval having been obtained for such inquiry.

Analysis: Section 148A of the Income-tax Act, 1961 contemplates that, before issuing notice under section 148, the Assessing Officer may conduct an inquiry under clause (a) with the prior approval of the specified authority and thereafter serve a notice under clause (b) on the basis of the information and the results of inquiry, if any. In the present matter, the approval was obtained for conducting inquiry, but the record showed that no such inquiry was carried out before issuance of the notice under section 148A(b). The subsequent completion of preliminary proceedings under section 148A(d) and issuance of notice under section 148 could not cure the initial defect.

Conclusion: The notice under section 148A(b), the consequential order under section 148A(d), and the notice under section 148 were held unsustainable and were quashed; the matter was remitted to the Assessing Officer to conduct inquiry in accordance with section 148A(a) and proceed afresh according to law.

Ratio Decidendi: Where inquiry is proposed under section 148A(a), the Assessing Officer must conduct such inquiry after obtaining prior approval of the specified authority before issuing notice under section 148A(b); failure to do so vitiates the reassessment initiation and its consequential steps.

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