Section148A-Reopening-Incorrect information-Non-application of mind by Assessing Officer Notice u/s. 148A(b) as well order u/s. 148A(d) bad in law.
Petitioner is an individual assessed on income fromsalary, house property and other sources. Petitioner filedROl on 29th November, 2019, for Assessment Year 20192020. The return was processed and an order dated26th February, 2020, was passed under section 143(1)of the Act. Subsequently, Petitioner received a noticedated 31s March, 2023, u/s. 148A(b) of the Act allegingthat there was information which suggests that incomechargeable to tax for Assessment Year 2019-2020 hasescaped assessment within the meaning of Section 147of the Act. The details of the information / enquiry werealso enclosed. Petitioner was directed to submit a reply tothe notice along with supporting documents on or before20th April, 2023.
The only information Respondent No. 1 had was thatPetitioner, despite havingsalary of 58,18,452 perannum and having purchased securities worth 5,22,000,was a non-filer for the Assessment Year 2019-2020,having failed to file a return of income. In short, thebasis for re-opening is despite having a salaried income,Petitioner has not filed a return of income..
The Petitioner, as per the e-Proceedings responseacknowledgement responded to the notice dated26th April, 2023, issued u/s. 148A(b) of the Act andexplained that the Return of Income has been filed andathe copy Income Tax Returns were also attached.
On 26th April, 2023, the impugned order u/s. 148A(d) ofthe Act came to be passed rejecting the objections. TheAssessing Officer (AO) observed that “the assessee inhis reply only stated that he had filed Income Tax Returnsfor the year under consideration. However, the assesseedid not provide his justification for the transactions in question. Thus it is logical to conclude that the assesseehas no explanation to offer with respect to the abovementioned information suggesting escapement of incomein the case for Assessment Year 2019-2020.
The Hon. Court held that the order dated 26th April, 2023,passed under Section 148A(d) of the Act is unsustainableThis is because the notice under Section 148A(b) ofthe Act does not call upon Petitioner to provide anyjustification for any transaction in question. The entirebasis for issuing the notice under Section 148A(b) of theAct was that Petitioner was a non-filer for AssessmentYear 2019-2020 as he had failed to file the Return ofIncome, and therefore, the income from salary andpurchase of securities have not been declared / offeredfor taxation. But the fact is, Petitioner had filed his Returnof Income and had also paid a total tax of 18,36,575and had also claimed a refund of 1,27,100. Therefore,the order under Section 148A(d) of the Act, passed on26 April, 2023, was quashed and set aside. Consequently,the notice issued under Section 148A(b) of the Act, dated a26th April, 2023, was quashed and set aside.
The Court further observed that even the notice underSection 148A(b) of the Act was unjustified. This isbecause the AO, before issuing the notice, was boundato at least verify or enquire following the information thatwas received in accordance with the Risk ManagementaStrategy. The Hon. Court referred to the guidelines foraissuance of notice under Section 148 of the Act bearingF. No. 299/10/2022-Dir(Inv.Ill)/611 dated 1s August,2022, paragraph 2.1 (vi) and (vii) and the instructionregarding the uploading of data on functionalities /portal of the Income Tax Department bearing F. No.299/10/2022-Dir(Inv. III)/647 dated 22nd August, 2022,paragraphs 3 and 4.
The court observed that if the AO had only verified inthe portal of the assessee before initiating proceedings,particularly when he had the PAN number with him, AOwould have realised that not only has Petitioner filed theReturn of Income, but also the return has been processedand an order dated 26th February, 2020, under Section143(1) of the Act had been passed. Therefore, the noticeissued under Section 148A(b) of the Act also has to bequashed and set aside..
Narendra Kumar Shah vs. The ACIT Circle – 42(2)(1) 19
[WP No. 2558 of 2023;
Date of Order: 10th October, 2023 (Bom.) (HC);
A.Y.: 2019-2020]
Ajay R. Singh Advocate
The Bombay Chartered Accountant Journal