2023 (3) TMI 564 - HC - Income Tax

Reopening of assessment u/s 147 - Validity of order u/s 148A - Obligation cast upon the revenue in terms of Section 148A(b) to provide to the assessee anything beyond providing him the information - HELD THAT:- In the present case admittedly, no material had been supplied to the Petitioner, notwithstanding the fact that there was material available with the AO as can be seen from the order passed by the assessing officer u/s 148A(d).

This was in the shape of a statement recorded, during survey action of the partner of BGR Construction LLP. There also appears to be a sale list, which was allegedly found during the search operations containing the names of 72 investors including the Petitioner which although referred to in the order u/s 148A(d) as also in the clarification communication dated 21st March 2022 was not provided to the Petitioner. Interestingly, while the communication dated 21st March, 2022, did say that the list of total sale “was being attached for the ready reference of the Petitioner for purposes of submitting a reply to the show cause notice, no such list was admittedly furnished”.

It goes without saying that providing information to the Petitioner, without furnishing the material based upon which the information is provided, would render an assessee handicapped in submitting an effective reply to the show cause notice, thereby rendering the purpose and spirit of Section 148A(b) totally illusive and ephemeral. The fact that the material also was required to be supplied can very well be gauged from the clear directions issued by the Supreme Court in the case of Union of India V/s. Ashish Agarwal [2022 (5) TMI 240 - SUPREME COURT]

Two other arguments were raised by Mr. Walve during the course of argument, pertaining to the failure on the part of the assessing officer to obtain the prior approval from the specified authority before issuing the clarification communication dated 21st March 2022, as also the fact that the assessing officer ought to have first conducted an inquiry in terms of Section 148A(a) of the Act.

We do not deem it absolutely necessary to deal with these issues in the present petition. Be that as it may, we hold that the reassessment proceedings initiated are unsustainable on the the ground of violation of the procedure prescribed u/s 148A(b) of the Act on account of failure of the AO to provide the requisite material which ought to have been supplied alongwith the information in terms of the said section.

Petition is allowed. The order impugned passed u/s 148A(d), the notice impugned u/s 148 of the Act are hereby quashed.