TaxTMI 
TaxTMI 
2026 (8) TMI 1481
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...., calling for the records pertaining to the impugned Show Cause Notice dated 26.03.2026 issued u/s. 148A(1) of the Act, the Order dated 24.06.2026 passed u/s. 148A(3) of the Act and the consequential Notice dated 24.06.2026 issued u/s. 148 of the Act for the Assessment Year 2024-25, and after examining the legality and validity thereof, be pleased to quash and set aside the same as being without jurisdiction, illegal, arbitrary, contrary to the provisions of Sections 147, 148, 148A, 149, 151 and 152(3) of the Act, violative of the principles of natural justice and otherwise unsustainable in law, and pass such further or other order(s) as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case." 3. The facts of the case in brief are that the petitioner is a partnership firm engaged in the business of trading in electrical fittings and retail, having its office at Hyderabad. Respondent No. 1/Jurisdictional Assessing Officer issued the show cause notice dated 26.03.2026 under Section 148A(1) of the Act, for the assessment year 2024-25, and thereafter passed the impugned order dated 24.06.2026 under Section 148A(3) of the Act, and consequently issue....
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....emanated from a search action conducted in the case of the Polycab Group on 22.12.2023, and that the proceedings were consequently governed by Section 152(3) of the Act. On this basis, the petitioner submitted that the jurisdictional conditions prescribed under the Act for initiation of reassessment proceedings stood unfulfilled, and that the proceedings were liable to be dropped. 6. Thereafter, respondent No. 1 passed the impugned order dated 24.06.2026 under Section 148A(3) of the Act rejecting the objections and submissions filed by the petitioner. In the said order, respondent No. 1 apart from reiterating the allegations contained in the show cause notice, placed reliance on the additional material and allegations pertaining to the search conducted in the case of M/s. Polycab India Limited, including references to the alleged activities of the Sunrise Group, a parallel set of accounts described as "Ka", and statements of third parties recorded during the course of the search proceedings to conclude that the petitioner had allegedly undertaken unexplained transactions. Respondent No. 1, however, remained silent on the jurisdictional objections specifically raised by the petit....
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....3) are not confined only to searched persons but extend to all the assessees against whom reassessment proceedings are initiated on the basis of or as a consequence of a search conducted between 01.04.2021 and 01.09.2024 and in whose cases incriminating material is alleged to have been found. The relevant paragraph on which reliance is placed by the learned counsel for the petitioner is reproduced hereunder: "12. The contention raised before us by the Revenue, to the extent that the Finance (No. 2) Act of 2024 will apply in the present case, as there is no search conducted against the petitioner, is misconceived, since the reopening of the assessment against the petitioner is exclusively premised upon the incriminating materials found during the search under Section 132 of the Act. The provisions of Section 152(3) of the Act are not limited for undertaking the reassessment against searched person only, as projected before us by the Revenue, and not against other person, who is not subjected to search. provision of Section 152(3) of the Act is applicable to all the assessee, where the reassessment proceedings are initiated, 'on the basis' or 'as a consequence of....
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....y and truly all material necessary for the assessment of the petitioner for the assessment year in question." Learned counsel for the petitioner supported her argument by submitting that it is a settled principle of law that the reasons recorded for reopening must disclose independent application of mind by the Assessing Officer, must be clear, unambiguous and self-explanatory and must establish a live nexus between the material relied upon and the formation of belief that income chargeable to tax has escaped assessment. 11. Reliance is also placed upon the judgment of the Bombay High Court the case of in Ananta Landmark (P) Ltd. vs. CIT (2021) 439 ITR 168 wherein it has been held that the validity of reassessment proceedings must be tested only on the basis of the reasons recorded and the same cannot subsequently be supplemented or improved upon. The relevant paragraphs on which reliance is placed by the learned counsel for the petitioner is reproduced hereunder: "17. We are satisfied that the petitioner had truly and fully disclosed all material facts necessary for the purpose of assessment. Not only material facts were disclosed by the petitioner truly and fully b....
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.... material on record, one view is conclusively taken by the Assessing Officer, it would not be open to the Assessing Officer to reopen the assessment based on the very same material with a view to take another view. The principle which has been enunciated in Cartini must apply to the facts of a case such as the present. The assessee had during the course of the assessment proceedings made a complete disclosure of material facts. The Assessing Officer had called for a disclosure on which a specific disclosure on the issue in question was made. In such a case, it cannot be postulated that the condition precedent to the reopening of an assessment beyond a period of four years has been fulfilled." xxx xxxxxx 19. As already mentioned, it cannot be said in the present case that there was an omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. It cannot be stated that the condition precedent to the reopening of an assessment beyond a period of four years has been fulfilled. The statement in the reasons for reopening "I have reasons to believe that income of Rs. 7,66,66,663 which was chargeable to tax ....
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....etitioner having already been afforded such an opportunity and having filed replies and objections dated 03.04.2026 and 21.04.2026, the petitioner was obligated to appear before the Assessing Officer in the reassessment proceedings now set in motion, place its explanation, evidence and objections including those relating to Section 152(3) and the validity of the sanction under Section 151 on record, and permit the assessment to be completed on merits, rather than short-circuiting the statutory process by invoking the extraordinary jurisdiction of this Court at a stage when no final or prejudicial order determining tax liability had yet come to be passed. 14. Having heard the contentions put forth on either side and on perusal of records, the question that falls for our consideration is whether a show cause notice issued under Section 148A(1) of the Act, and the consequential order issued under Section 148A(3) and notice under Section 148 of the Act, initiating reassessment proceedings, can be assailed in a petition under Article 226 of the Constitution of India, at the very threshold of the reassessment stage without the assessee first availing the statutory remedies and procedu....
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.....2026 under Section 148A(3) of the Act, has not, in terms dealt with the petitioner's specific objections regarding the applicability of Section 152(3) and the validity of the sanction under Section 151. This omission however does not in our considered view convert what is otherwise a preliminary step in a reassessment proceeding into a final and concluded order amenable to challenge under Article 226 at this stage. If anything adverse is decided, it is a matter that can and ought to be appealed before the Assessing Officer in the course of the reassessment itself and, in the event if the reassessment culminates into an order adverse to the petitioner, it can be challenged before the appellate authorities under the Act who possess the fullest power to test the very same jurisdictional objections on their merits, including the question of validity of the sanction and the applicability of Section 152(3). 18. This Court is not oblivious to the fact that in a given case where there is a total absence of jurisdiction or a patent violation of a mandatory statutory pre-condition going to the very root of the power to reassess, may justify interference at the threshold without relegatin....