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2024 (1) TMI 368
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....uential notices dated 28.3.2023 and 29.3.2023 issued by the Jurisdictional Authority under Section 148 of the IT Act. 3. Brief facts of the case are that the petitioner is the proprietor of M/s Tirumala Enterprises and engaged in trading of marbles, stones and granite etc. The petitioner is regularly filing his income tax return and also filed income tax return for the assessment year 2019-20 on 29.10.2019 declaring total income of INR 3,13,390/-. 4. The Jurisdictional Authority issued a notice to the petitioners dated 13.3.2023 under Section 148A(b) of the IT Act to show cause why notice under Section 148 of the IT Act should not be issued in view of the information available with it. Along with the notice, an annexure has also been supplied to the petitioner, wherein information available with the respondent-department is disclosed. Along with the annexure, a photo copy of the Insight Portal is also attached. 5. In response to the above notice, the petitioner filed a detailed reply dated 17.3.2023, wherein apart from submitting his defence, he has prayed that before proceeding further in the matter, he may be provided copy of the report of the DDIT/ADIT (Inv.) and comple....
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....respondent-department has not provided any specific particulars of alleged fake entities like their name, invoice number, address, GST registration etc. It is submitted that the petitioner, in his reply dated 17.3.2023, has requested for providing complete details and particulars of alleged fake entities so that he can file a detailed response to it, however, no such information was provided and the Jurisdictional Authority has passed the order dated 28.3.2023. 11. Learned counsel for the petitioner has emphasized that the Jurisdictional Authority has placed heavy reliance on the report of the DDIT/ADIT (Inv.) 1, Udaipur to the alleged bogus purchase from fake entities filed by the petitioner, but copy of the same has not been supplied to him and as such, sufficient material, on which, the Jurisdictional Authority has relied upon, has not been supplied to the petitioner. 12. Learned counsel for the petitioner has argued that the Division Bench of this Court in the case of Micro Marbles Private Limited Vs. Office of the Income Tax Officer (DBCWP No. 13719/2021) decided on 4.1.2023, has categorically held that the material, on which, the assessing authority has placed reliance ....
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....he controversy involved in the present writ petitions, it would be apposite to quote the existing provisions of Sections 147, 148 and 148A of the IT Act. Sections 147, 148 and 148A of the IT Act read as under : "147. If any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the Assessing Officer may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for such assessment year (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year). Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment years. unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fu....
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.... noticed by the Assessing Officer that the income of the assessee exceeds the maximum amount not chargeable to tax, or as the case may be, the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return; (d) where a person is found to have any asset (including financial interest in any entity) located outside India. Explanation 3.-For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148. Explanation 4.-For the removal of doubts, it is hereby clarified that the provisions of this section, as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012." Explanation.-For the purposes of assessment or reassessment or recomputation under this section, the Assessing Officer may asses....
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....nce with the risk management strategy formulated by the Board from time to time; Jor (ii) any audit objection to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of this Act; or (iii) any information received under an agreement referred to in section 90 or section 90A of the Act; or (iv) any information made available to the Assessing Officer under the scheme notified under section 135A; or (v) any information which requires action in consequence of the order of a Tribunal or a Court. Explanation 2-For the purposes of this section, where, (i) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after the 1st day of April, 2021, in the case of the assessee, or (ii) a survey is conducted under section 133A, other than under sub- section (2A) [*] of that section, on or after the 1st day of April, 2021, in the case of the assessee; or, (iii) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissi....
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....under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in clause (c) is received by him, or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish a reply as per clause (b) expires: Provided that the provisions of this section shall not apply in a case where,- (a) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of the assessee on or after the 1st day of April, 2021; or (b) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a search under section 132 or requisitioned under section 132A, in the case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or (c) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or documents, seized in a sear....
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....to the assessee under Section 148 of the IT Act by passing an order within specified time as prescribed with prior approval of the authority. Proviso to Section 148A of the IT Act speaks about exceptions where proceedings cannot be initiated under Section 148A, however in the facts of the present case, the same are not relevant, therefore, we are not offering any comments on it. 21. As per the above scheme, if an Assessing Officer is in receipt of any information, which suggests that any income chargeable to tax has escaped assessment, he may conduct any enquiry, if required, with prior approval of specified authority and after providing opportunity of hearing to the assessee, the concerned authority can pass order whether or not it is a fit case to issue notice under Section 148 of the IT Act. 22. The "information", on the basis of which, the Assessing Officer can proceed under Section 148A of the IT Act is explained in Explanation 1 and 2 of Section 148 of the IT Act. 23. We are of the view that Section 148A(b) mandates only to supply information to the assessee and not the material, on the basis of which, the Assessing Officer has formed prima facie opinion that any cha....
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.... The statutory scheme is, therefore, clear that the assessing authority on receipt of information which suggests that the income chargeable to tax has escaped assessment may conduct any enquiry in the matter, if required, and then provide an opportunity of being heard to the assessee by serving upon him a notice under clause (b). On receipt of reply of assessee to the notice referred to in clause (b) the Assessing Officer on the basis of material available on record including the reply of assessee decide whether or not it is a fit case to issue a notice under Section 148. 11. The scheme for reassessment of escaped income introduced vide Finance Act, 2021 provides for an opportunity to the assessee before issuance of notice under section 148 of the Act of 1961. After such notice to the assessee and consideration of reply of assessee in response to the notice the assessing authority has to decide on the basis of material available on record by passing an order under section 148A(d) whether a notice under section 148 is fit to be issued in the case. The consideration at the stage of passing order under section 148A(d) is thus limited to ascertainment of information with the A....
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....fficer which suggests that the income chargeable to tax has escaped assessment has been defined in Explanation 1 to the second proviso to section 148 of the Act which is already extracted above. There is no challenge to the information contained in the notice under section 148A(b) of the Act on the ground that the information available with the Assessing Officer is not referable to Explanation 1 to the second proviso to section 148 of the Act. The Finance Act, 2021 is otherwise not under challenge. We are, therefore, of the considered opinion that the challenge to the information, by the assessee, on the defence setup in reply to show cause notice merits no further consideration at the stage of decision under section 148A(d) of the Act." 28. The High Court of Madhya Pradesh in Amrit Homes Private Limited's case (supra), while considering Section 148A of the IT Act has held as under : "7. From the aforesaid, it is evident as day light that the present petition which is also against the order u/S 148A(d) and the consequential notice u/S 148 of IT Act needs to be considered on the anvil of the grounds raised in this petition and also on the anvil of foundational prerequisi....
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....eable to tax has escaped assessment. This communication is made by issuance of show-cause notice which should contain enough information and reasons to reveal the said intention of the Assessing Officer. Thereafter, the assessee on receiving the show-cause notice is required to file reply. 11. The show-cause notice thus should be reasoned enough to enable the assessee to know the mind of the Assessing Officer as regards factum of certain income having escaped assessment and his intention to re-open assessment of such income. This is possible only when the show-cause notice contains enough information to disclose the intention of the Assessing Officer so as to afford reasonable opportunity to assessee to respond. The contents of the show-cause notice thus should be precise and concise satisfying the concept of reasonable opportunity. 12. This Court hastens to add at this juncture that this inquiry as explained above cannot be a detailed one where assessee is given opportunity of adducing evidence in support of his defence/response. However, this inquiry includes within its ambit, the obligation of the Assessing Officer to supply reasons which are suggestive of a pr....
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....a 5, Federation of A.P. Chambers v. State of Andhra Pradesh, (2000) 6 SCC 550 Para 7, State of West Bangal v. Kesoram Industries Ltd., (2004) 10 SCC 201 Para 106, State of Jharkhand v. Ambay Cements, (2005) 1 SCC 368 Para 24, 25 and 26, Ajmera Housing Corporation v. Commissioner Income Tax, (2010) 8 SCC 739 Para 36, Deputy Commissioner of Income Tax v. Ace Multi Axes System Limited, (2018) 2 SCC 158, Commissioner of Customs (Import) Mumbai v. Dilip Kumar Company, (2018) 9 SCC 1 Para 24 and 25, Checkmate Services Pvt. Ltd. v. Commissioner Income Tax, (2023) 6 SCC 451 Para 55 and 56]. 19. Applying this principle of interpretation of taxing statute, it is obvious from reading of Section 148A that it does not expressly provide for supply of any material/evidence in support of the show-cause notice u/S 148A(b). Thus this Court has no hesitation to hold that statutory provision u/S 148A does not obligate the Assessing Officer to supply any material/evidence, provided the show-cause notice contains reasons disclosing the mind of the Assessing Officer of nursing the prima facie view suggestive of a case where income chargeable to tax has escaped assessment. 20. This Court....
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.... not compel the Assessing Officer to supply material/evidence (documentary/oral) on the basis of which the aforesaid opinion has been formed by the Assessing Officer. 28. From the aforesaid analysis and in the backdrop of textual interpretation of Section 148A(b), it is evident that if the show-cause notice contains sufficient information revealing the opinion formed by Assessing Officer that certain income of assessee has escaped assessment with a precise but concise elaboration in the show-cause notice of the foundational material behind the opinion, then the show-cause notice can sustain judicial scrutiny even if the foundational evidence/material (oral/documentary) is not supplied to the assessee. 29. The reason for taking the aforesaid view is not far to see. 30. The insertion of Section 148A w.e.f. 01.04.2021 in the Income Tax Act is to ensure that the power u/S 148 is not exercised as a matter of course or without application of mind. Thus, the inquiry contemplated by Section 148A(b) is not a detailed or full-scale one, but is merely meant to offer reasonable opportunity of being heard to the assessee to avoid casual reopening assessment u/S 148. ....