The Allahabad High Court ruled that any observations of the assessing authority while passing order under section 148A(d) with regard to merits of assessment of income would remain subject to the order to be ultimately passed in reassessment proceedings under section 148 and would not be to the prejudice of rights and contentions of the assessee under section 148 as well as departmental remedies in respect thereof.
Facts
Petitioner is an individual who is engaged in the business of trading of Arecanut (Supari), Chopped Betal Nut and Sweet Betal Nut in the name of his proprietary concern namely “S.K.L. Enterprises”. He alleges that his Books of Account and other records are subject to audit under Section 44AB of the Income Tax Act, 1961.
He further claimed to be filing his return year after year and has been assessed to tax accordingly. For the Assessment Year 2019-20, the petitioner filed his return under Section 139(1) of the Act on 26.08.2019 disclosing total income of Rs. 6,81,630/-. The turnover during the year from his proprietary concern aggregated to Rs. 5,87,26,116/- and aggregate purchases are of Rs. 5,81,61,860/-.
He further asserted that he has been assessed under Section 143(1) of the Act on the basis of return submitted by him on 26.08.2019 and no notice has been issued to him under Section 143(2) of the Act.
Submissions
Advocate Ashish Bansal for the petitioner submitted that the authority concerned has not examined the petitioner’s reply to the notice, on merits, and the order impugned has been passed in a routine and mechanical manner.
Advocate Gaurav Mahajan appearing for the revenue submitted that the object of issuing notice under Section 148A of the Act is limited to ascertainment of information which suggests that income has escaped assessment and issues such as sufficiency or otherwise of material justifying reopening of assessment or adjudication on the correctness of information are ordinarily not warranted at this stage, in exercise of extraordinary writ jurisdiction. The limited enquiry contemplated at this stage is to ascertain existence of information which suggests that income has escaped assessment.
Decision
The division bench of Justice Shiv Shanker Prasad and Ashwani Kumar Mishra observed that reading of Section 148A reveals that the assessing authority shall, before issuing any notice under section 148 conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment.
The court further observed that the statutory scheme is 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.
It was held by the court that the order passed by the Assessing Officer under section 148A(d) of the Act regarding existence of information suggesting that income chargeable to tax has escaped assessment would otherwise remain subject to reassessment order passed under section 148 of the Act.
The court did not find any merit in the challenge laid to the order of assessing authority under section 148A(d) of the Act, 1961.
Case title: Deepak Kumar Yadav v/s Principal Commissioner Of Income Tax And Another
Citation: WRIT TAX No. – 561 of 2023
