Section 148 cannot be used without approval of the specified authority, as indicated in Section 151(ii) of the income tax Act: Supreme Court
CASE TITLE: ASHOK KUMAR MAKHIJA. V. UNION OF INDIA AND ORS.
CASE NO: W.P.(C) 16680/2022
ORDER ON: 07 May 2024
QUORUM: J. YASHWANT VARMA. V. JUSTICE PURUSHAINDRA KUMAR KAURAV
FACTS OF THE CASE:
The present petition, filed, seeks quashing of the notices dated 26 May 2022 and 30 July 2022, issued under Section 148A(b) and Section 148, respectively and the consequential order dated 30 July 2022 passed under Section 148A(d) of the Income Tax Act, 1961.
The facts leading present case is that the petitioner On 28 March 2017, was served with a summon seeking verification of cash deposits made by him in his bank account during the period of demonetization Accordingly, the Income Tax Return was filed by the petitioner for AY 2017-18 declaring a total income. The said ITR was subjected to scrutiny assessment on the issues of capital gains/loss on sale of property and cash deposits made during the demonetization period. The petitioner claimed that the said cash deposit in his bank account represents the sale proceeds of the business. While issuing notice dated 20 November 2019 under Section 133(6) of the Act, the Revenue sought confirmation from M/s Mahalaxmi Devi Flavours Pvt. Ltd., from whom the petitioner claimed to have made the purchases. Consequently, on 28 December 2019, an assessment order under Section 143(3) of the Act came to be passed accepting the aforesaid ITR. Later, on 08 April 2021, a notice under Section 148 of the Act was issued, reopening the assessment of the petitioner for AY 2017-18 on the ground that the income of the petitioner which was chargeable to tax, had escaped assessment. However, the said notice was quashed following the decision rendered by several High Courts and concluded that the Revenue issued the impugned notice dated 26 May 2022, under Section 148A(b) of the Act and initiated reassessment proceedings by supplying the petitioner with the information in its possession i.e., an exponential increase in the sales turnover of the petitioner during AY 2017-18, alleging that the same has escaped assessment. Consequently, the impugned order under Section 148A(d) dated 30 July 2022 was passed by the Revenue
LEGAL PROVISIONS:
Section 148 of the Income Tax Act, 1961, which states that if the assessing officer has a reason to believe that some income has escaped assessment, he/she can send a notice under section 148 to the taxpayer
Section 131(1A) of the Income Tax Act, which was introduced to keep a check on the assessee who has concealed income or is trying to conceal income.
Section 151 of income tax act, which states, The Commissioner or an officer authorised by him may, by an order, direct any person to furnish information relating to any matter dealt with in connection with this Act, within such time, in such form, and in such manner, as may be specified therein.
CONTENTIONS OF THE APPELLANT:
Mr. Kalrav Mehrotra, learned counsel for the petitioner argued that the reassessment proceedings for AY 2017-18 lack requisite jurisdiction and are entirely unlawful. He asserted that the initiation of these proceedings stems solely from a change of opinion without providing any new substantial evidence that would warrant such action by the Revenue. He, however, restricted his submission to the extent that as per Section 151 of the Act and because the reopening of the case is occurring after a lapse of more than three years, the appropriate authority for issuance of the notice under Sections 148 and 148A(b) of the Act should have been either the Principal Chief Commissioner or Principal Director General, or in their absence, the Chief Commissioner or Director General, instead of the Principal Commissioner of Income Tax, Delhi-10, who does not fall within the specified authorities outlined in Section 151 of the Act. He relied on the decision of this Court in the case of Twylight Infrastructure Pvt. Ltd. v. ITO & Ors.3 , to substantiate his argument that the impugned notice is bad in law.
COURTS ANALYSIS AND JUDGEMENT:
On hearing learned counsels for parties, the court observed the judgment rendered in Twylight Infrastructure Pvt. Ltd. v. ITO & Ors, Therefore, having regard to the aforesaid, the impugned notices and orders in each of the above-captioned writ petitions are quashed on the ground that there is no approval of the specified authority, as indicated in Section 151(ii) of the Act. The direction is issued with the caveat that the revenue will have the liberty to take steps, if deemed necessary, albeit as per law. Needless to add, the rights and contentions of both the sides will remain open, in the event the revenue triggers reassessment proceedings. Hence with all the above considerations and observations, for the reasons assigned in the aforenoted judgment, the bench allowed the instant writ petition and quashed the impugned notices dated 26 May 2022 and 30 July 2022 and the impugned order dated 30 July 2022, accordingly, The writ petition is disposed of.
“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”
judgement reviewed by: Sowmya.R