TaxTMI 
TaxTMI 
2026 (1) TMI 628
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....ustomers often seek for air travel insurance and the petitioner facilitates the same through its empanelled insurers which includes M/s. Reliance General Insurance Company Limited (hereafter "Reliance"). For such purpose, the petitioner collects the amount payable to the insurance company from its customers and remits the sums to Reliance. The insurance policy is directly issued in the name of the petitioner's customers and the petitioner earns commission for facilitating such transaction. d) The petitioner also has hoardings and other spaces at its premises for putting up marketing banners or advertisement material and the petitioner uses the same for generating revenue. It is the petitioner's case that during the financial year 2018-19 (Assessment Year 2019-20), the petitioner received a sum of Rs. 1,10,33,116/- from Reliance and offered the same to tax, while filing Income Tax Return (hereafter "ITR") for the said Assessment Year on October 31, 2019. e) The petitioner's aforesaid ITR was processed under Section 143(1) of the Income Tax Act, 1961 (hereafter "the said Act of 1961") and an intimation dated June 5, 2021 was furnished to the petitioner. However, the....
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....s made by the petitioner on April 09, 2025. The petitioner was thereby requested "to furnish further submission/document, if any, on or before 20/06/2025". j) The said notice was followed by another notice dated June 16, 2025, again under Section 148A(1) of the said Act of 1961 along with an annexure whereby the petitioner was informed that the petitioner's reply dated April 09, 2025 submitted in respect of show cause notice dated March 30, 2025 did not "co-relate with the notice and information shared" with the petitioner and that the information was therefore once again being shared with the petitioner. k) The petitioner furnished its fresh reply to the said show cause notice on June 20, 2025 thereby objecting to impugned proceedings for reassessment of the petitioner's income for the Assessment Year 2019-20 on similar lines as done in its earlier reply dated April 09, 2025 and urged the income tax authority to drop the reassessment proceedings. l) Thereafter an order under Section 148A(3) of the said Act of 1961 was passed by the Assessing Officer thereby concluding that petitioner's case was "FIT" for issuance of notice under Section 148 of the said A....
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....e earned by the petitioner in the relevant Assessment Year. g. The order under Section 148A(3) of the said Act of 1961, reveals that the Assessing Officer has proceeded to reopen the petitioner's case for assessment on the ground that no details had been furnished with respect to the receipt of Rs. 1,02,41,800/- from M/s. Prudent Insurance Brokers Private Limited (hereafter "Prudent") while the charge levelled against the petitioner in the notice to show cause under Section 148A(1) was with regard to the transaction of the petitioner with Reliance for amount of Rs. 1,09,41,800/-. h. A judgment of the Hon'ble Division Bench of this Court in the case of Excel Commodity & Derivative (P.) Ltd. vs. Union of India [2023] 150 taxmann.com 94 (Calcutta) was relied on for the proposition that if the notice under Section 148A(b) of the said Act of 1961 called upon a person to show cause as to why such person's case would not be reopened for assessment by citing a particular reason, then reopening could not be done on another reason indicated by the Assessing Officer in the order passed under Section 148A(d) of the said Act of 1961. i. While exercising the power of r....
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....nder Section 148A of the said Act of 1961. In such view of the matter, it was not open to the petitioner to contend that since the notice under Section 148A(1) had been issued calling upon the petitioner to show cause why reassessment proceedings would not be initiated on the ground of its transactions with Reliance, therefore, the Assessing Officer would be denuded of its authority to reopen the case for assessment of the petitioner's income for the Assessment Year 2019-20 on the ground that the petitioner had not been able to satisfy the revenue authorities as regards the petitioner's transactions with Prudent. c. At the stage of issuance of notice under Section 148 of the said Act of 1961, the revenue authorities are not required to reach a definite conclusion. The revenue authorities are well authorised to reopen a case if there is information suggesting that income has escaped assessment. d. In the case at hand there is information suggesting that income has escaped assessment and a Writ Court should be loath to intervene at this stage. e. A judgment of the Hon'ble High Court of Jharkhand in the case of Renu Singh vs. Principal Commissioner of Income....
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....ed by the statutory protocol of Section 148A of the said Act of 1961, unless the case falls under the first proviso to Section 148A. Issuance of notices under Section 148 as well as under Section 148A is predicated upon existence of information with the Assessing Officer which suggests that income chargeable to tax has escaped assessment. A meaningful reading of Section 148A(1) of the said Act of 1961 would necessarily lead to the inference that the notice must indicate or specify the information which according to the Assessing Officer is suggestive of income having escaped assessment. 7. In the case at hand the information that has been supplied to the petitioner by the notice issued to it under Section 148A(1) of the said Act of 1961 is as follows:- "The information contains that your company has made transaction with following insurance companies, during the year under consideration, which is not in accordance with the provision of IRDAI. Companies through which transaction was made Amount M/s. Reliance General Insurance Company Limited Rs. 1,09,41,800/- {In compliance of the stipulations contained in Section 148A(1) of the Income-tax Act, 1961,....
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....CE BROKERS PVT LTD 1,71,57,900 AROMA VENTURES AARFA5667J TOYOTA TSUSHO INSURANCE BROKER INDIA PVT LTD 23,71,700 ASHOK NARKEM AEJPN2860A ASHOK NARKEM 39,63,000 BALJEETSINGH SURJITSINGH BAGGA AARPB8241M No Intermediaries 49,01,133 BALJEETSINGH SURJITSINGH BAGGA AARPB8241M NISSAN RENAULT FINANCIAL SERVICES PVT LTD 7,67,256 BALJEETSINGH SURJITSINGH BAGGA AARPB8241M PARAM AUTOMOBILES PRIVATE LIMITED 7,67,256 BALJEETSINGH SURJITSINGH BAGGA AARPB8241M PUNJAB AUTOMOBILES INDIA PRIVATE LIMITED 7,67,255 BALMER LAWRIE & CO. LTD. AABCB0984E PRUDENT INSURANCE BROKERS PVT. LTD 1,02,41,800 BALMER LAWRIE & CO. LTD. AABCB0984E No Intermediaries 7,00,000 However, on perusal of the submission filed and documents furnished in course of proceedings u/s. 148A of the Act, as evident in Table-A & B above, it has only shown the receipt from Reliance General Insurance Co. Ltd. totalling to Rs. 1,10,33,116/-. However, no detail has been furnished with respect to the receipt of Rs. 1,02,41,800/- from M/s. Prudent Insurance Brokers Pvt. Ltd. Further, in course of proceedings u/s. 148A of the Act, no subm....
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....ssued notice under section 148A(b) of the Act dated March 22, 2022. The sum and substance of the allegation in the notice was that the appellant-assessee has done fictitious derivative transactions with M/s. Blueview Tradecom Pvt. Ltd. The assessee submitted their detailed reply to the said notice enclosing all relevant documents in support of their claim to justify that they have not indulged in any fictitious derivative transaction. The procedure contemplated under section 148A requires the Assessing Officer to consider the reply and thereafter pass a reasoned order, if in the opinion of the Assessing Officer, the information furnished by the assessee in their reply is satisfactory, then nothing more requires to be done. On the other hand, if the Assessing Officer is of the view that the reply furnished by the assessee is not acceptable, then he is to pass a speaking order in terms of clause (d) of section 148A of the Act. In the instant case, the Assessing Officer has passed the order under section 148A (d) dated April 7, 2022. On a reading of the said order, we find that the Assessing Officer has indirectly accepted the explanation given by the appellant-assessee that they have....
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....scaped assessment but then the information must suggest that there is income has escaped assessment. In the case at hand there is no such suggestion at all. The resounding words of Lakhmani Mewal Das (supra) deserve notice in this context:- "As stated earlier, the reasons for the formation of the belief must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income Tax Officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. It is no doubt true that the court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the Income Tax Officer on the point as to whether action should be initiated for reopening assessment. At the same time we have to bear in mind that it is not any and every material, howsoever vague and indefinite or distant, remote and farfetched, which would warrant the formation of the belief relating to es....
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....rted to so as to reopen assessment. This information cannot be a ground to give unbridled powers to the Revenue. Whether it is 'information to suggest' under amended law or 'reason to believe' under erstwhile law the benchmark of 'escapement of income chargeable to tax' still remains the primary condition to be satisfied before invoking the powers under section 147 of the Act. Merely because the respondent-Revenue classifies a fact already on record as 'information' may vest it with the power to issue a notice of reassessment under section 148A(b) but would certainly not vest it with the power to issue a reassessment notice under section 148 post an order under section 148A(d)." 8. As pointed out in the aforesaid mentioned decision, the term "information" in Explanation 1 under section 148 cannot be lightly resorted to so as to reopen assessment and this information cannot be a ground to give unbridled power to the Revenue. In fact, in the case on hand, the information has been lightly used which resulted in issuance of notice. As pointed out earlier, the assessee had submitted the explanation to the notice along with documents in support of their claim. The Assessing Officer has g....
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.... cannot come to the rescue of the revenue inasmuch as the same was delivered in the peculiar facts of the case where the Court was satisfied that there was enough material to justify issuance of notice under Section 148 of the said Act of 1961. Paragraph 5.1 of the report would clearly reveal the same:- "5.1 Whereas in the present case, the revenue authority has taken into consideration the statement of Mr. Anil Kumar Khemka and on the basis of that statement and other material, notice came to be issued." 24. Mr. Sharma had contended that since Section 147 of the said Act of 1961 empowers the Assessing Officer to make addition on new facts even without following the procedure under Section 148A of the said Act of 1961 therefore notwithstanding the fact that a notice under Section 148A(1) had been issued to the petitioner calling upon it to show cause as to why reassessment proceedings would not be initiated on the ground of its transactions with Reliance, the Assessing Officer would still be justified to reopen the case for assessment of the petitioner's income for the Assessment Year 2019-20 on the ground that the petitioner had not been able to satisfy the revenue aut....