TaxTMI 
TaxTMI 
2026 (1) TMI 616
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....assessment order dated 27.03.2023 u/s 147/144B of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') passed by the NFAC, Delhi for AY: 2018-19. 2. Heard and perused the records. The assessee is an individual and the return of income was filed declaring income of Rs. 1,10,90,564/- and during the assessment proceeding the case was picked up for scrutiny and the scrutiny assessment was completed at returned income. Subsequently the case of the assessee was reopened for the reason that assessee has taken unsecured loans from dummy entities. The assessee has replied and order u/s 144A(d) of the Act was passed and notice u/s 148 of the Act was issued. Assessee filed return in response to notice u/s 148 of the Act on 03.05.2022. Du....
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....found that the assessee has received unsecured loans from various dummy companies giving accommodative entries which were linked with the above-mentioned company. 5. It comes up from this notice absolutely no details with regard to amount of unsecured loans and the details of alleged dummy companies is mentioned. The reopening merely mentions that a search was conducted on M/s KK Spun India Ltd. on 23.03.2021 and assessee was found to have received unsecured loans from various dummy companies and there is no allegation of any information available suggesting income chargeable to tax escaping assessment. Assessee has provided copy of reply dated 19.03.2022 available at page No. 7-44 wherein in response to show cause notice dated 12.03.202....
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.... the notice issued u/s 148A(b) it appears that though the said notice was issued with the prior approval of the PCIT, Delhi-20, however, no material whatsoever was supplied nor the results of the enquiries, if any, conducted were confronted to the assessee and it is merely stated that based on the information received through insight portal it was found that assessee was having accommodation entry in the shape of bogus purchases. It is also seen that assessee in reply to the said notice had filed a detailed reply on 24th March, 2020 which was sent through email to the AO, however, such reply was not considered and the order was passed u/s 148A(d) recording the satisfaction that it is a fit case for issue of notice u/s 148 of the Act. ....
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....the case of the assessee based on the information available on the insight portal which is uploaded under Risk Management Strategy formulated by CBDT and no independent application of mind by AO before using such information against the assessee nor any enquiry was made as provided in section 148A(a) of the Act. This action of AO is highly arbitrary as he failed to appreciate the intent of the legislation behind introduction of provisions of section148A before issue of notice u/s 148 of the Act. The AO not only proceeded to issue notice u/s 148A(a) without making verification of the vague and insufficient information available with him to satisfy himself that income chargeable to tax has escaped assessment but at the same time also failed t....
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....gh the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross examine, the adjudicating authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the adjudicating authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opport....
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....than High Court in the case of R.K. Build creations (Pvt.) Ltd. vs. ITO reported in [2024] 462 ITR 478 (Raj) has held as under: "It is mandatory for the AO to pass speaking order, taking into consideration not only the material on record but also the reply filed. The additional reply dt. 14.06.2022 was not considered, consequently there was no occasions to deal with the objections raised therein. The impugned order is not as per the procedure prescribed u/s 148A of the Act and cannot stand judicial scrutiny." Thus, non-consideration of the reply filed by the assessee also render the reassessment order passed as invalid. 16. After considering the above discussion, we are of the view that the Assessing Officer has f....