TMI Blog2023 (1) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... in support of the allegations made in the notice dated 19.03.2022 (Annexure P-3) within four weeks, including the reports, if any. Thereafter, the Assessing Officer shall decide the matter in accordance with law. - CWP No. 6472 of 2022 - - - Dated:- 26-12-2022 - The Hon ble Mr. Justice Tarlok Singh Chauhan , Judge And The Hon ble Mr. Justice Virender Singh , Judge For the Petitioner : Mr. Vishal Mohan, Senior Advocate with Mr. Praveen Sharma and Mr. Aditya Sood, Advocates For the Respondents : Mr. Vinay Kuthiala, Senior Advocate with Ms. Vandna Kuthiala, Advocate ORDER Tarlok Singh Chauhan , Judge The petitioner is a partnership concern engaged in its business activities in Baddi. The petitioner is regularly assessed to income tax and had duly filed its return for the assessment year 2018-19 (impugned assessment year). The said return was processed under Section 143(1) of the Income Tax Act, 1961 by the Central Processing Centre of respondent No.1, Bengaluru and order to this effect was also passed vide Annexure P-2. The respondents thereafter served upon the petitioner notice under Clause (b) of Section 148A of the Income Tax Act (for short the Act ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 26,99,62,000/-and had escaped notice and, therefore, the impugned notice had rightly been issued. The respondents have further sought to justify their claim on the ground that the notice under Section 148A(b) was issued on the basis of the information received in the online portal of the Income Tax Department i.e. Insight Portal under High Risk/CRIU/VRU . According to the respondents, the petitioner had sold mutual funds amounting to Rs. 813.63 lakhs to different parties during the financial year 2017-18 relevant to assessment year 2018-19. The petitioner had interest in assets of firm or association of persons as a partner or member amounting to Rs.1807.73 lakhs and that an income of Rs. 29,99,62,000/- has escaped assessment. 6. We have heard learned counsel for the parties and have also gone through the material placed on record. 7. Section 148A of the Act reads as under:- 148A. The Assessing Officer shall, before issuing any notice under section 148,- (a) 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; (b) provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to income chargeable to tax escaping assessment for any assessment year in the case of the assessee.] Explanation.-For the purposes of this section, specified authority means the specified authority referred to in section 151.] 8. At the outset, it needs to be noticed that Section 148A was incorporated so as to ensure that the there is proper application of mind by the authorities by passing a detailed, reasoned and a speaking order under Section 148A(d) of the Act, instead of passing a cryptic order in a mechanical manner. The Assessing Officer was expected to rebut each and every objection, reply and submissions with proper reasons. This is clearly evident from the new revised guidelines issued by the Central Board of Direct Taxes dated 01.08.2022, though the assessment in the case is prior to the issuance of such guidelines. Nonetheless, these guidelines would definitely work as a guideline and also an indicator as to why the same have been issued. 9. As observed above, the aforesaid guidelines are issued after the assessment, the same would in stricto senso not be applicable to the facts of the instant case. 10. Adverting to the facts, it would be noticed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of section 11 of the Income Tax Act, 1961. 11. The respondents filed reply and the same is reproduced as under:- 1. As mentioned in the notice that The assessee has sold Mutual funds amounting to Rs. 813.63 locs to different persons during the year under consideration In respect to the same we want to submit that the assessee has not sold mutual funds amounting to Rs. 813.63 Lacs during the relevant assessment year 2018-19. However, your goodself stated in the notice that sale of mutual funds of Rs. 813.63 lacs were made during the year under consideration. So, keeping in view of providing an opportunity of being heard and principal of natural justice, it is requested to your goodtself to kindly provide details of transactions as claimed by your goodsell of Rs. 813.63 lacs in the name of the assessee firm like any document to provide dates of each transactions and name of mutual fund held in the name of the assessee firm. bank account in the name of assessee which shows the amount of transaction etc. so that assessee's response can be Bled with your goodself-with respect to information provides. 2. Further, it is mentioned in the notice that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of mutual fund, name of country to which remittance has been made etc. kindly provide the same, so that we could file our response accordingly. Hope you find the above information in order. Kindly apprise us in case of any queries. 12. The respondents still proceeded to issue an order under Clause (d) of Section 148A of the Act, wherein not only the contents of the earlier notice, but also the reply submitted by the petitioner were quoted in verbatim. 13. As regards the allegations of mutual funds, it was for the first time that the names of such persons were specified, as is evident from para 1 of the order, which reads as under:- In consonance to the insight instructions No. 48 dated 24.02.2022, the information flagged through source of Insight Portal in accordance with the Risk Management strategy under the category High Risk CRIU/VRU has been received in respect of the assessee for the F.Y. 2017-18 as under:- Nature of transaction Source of information Value Sale of Mutual funds Arun Kumar Jain, Rameshwar Dayal Jain/sameer Aggarwal, Yogender Kumar Jani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner has made purchases from certain nonfilers. However no details or any information of these entities was provided to the Petitioner. It is not understood as to how the Petitioner was to know which of the entities it dealt with were filers or non-filers! 9. Further, the impugned order states that a report was prepared against the Petitioner-company which concludes that the assessee had shown bogus purchases from bogus entities to suppress the profit of the company and reduce the tax liability during the years 2015-16 to 2020-21. However, no such report which forms the basis for the information on which the assessment was proposed to be reopened had been provided to the Petitioner. In fact, there are no specific allegations in the show cause notice to which the Petitioner could file a reply. 10. Keeping in view the aforesaid, the impugned order dated 30th March, 2022 passed under section 148A(d) and notice dated 31st March, 2022 issued under section 148 of the Act are quashed and the Respondents are given liberty to furnish additional materials in support of the allegations made in the show cause notice dated 16th March, 2022 within three weeks including reports, if any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ines on the subject issued vide F.No.247/140/2017-A PC-1 dated 10.01.2018. In view of the above, in supersession of the earlier guidelines as referred above, the following new guidelines are hereby issued. 2. The salient features of Finance Act, 2021 and Finance Act, 2022 w.r.t. Section 148 to 151A i.e. assessment/reassessment procedure of Income Escaping Assessment are as under: 2.1Before issuing notice u/s 148, the Assessing Officer (AO) must observe the following procedures laid down u/s 148A except in certain categories of cases (specified in the proviso to section 148A): i. Notice under section 148 can be issued only if there is an information with the assessing officer which suggest that income chargeable to tax has escaped assessment in the case of assessee for the relevant assessment year. Information has been defined as per Explanation 1 of Section 148 of the Act. Explanation 1- Information with the AO which suggests that the income chargeable to tax has escaped assessment- (i) any information in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases the provisions of Section 148A shall not apply, if, (a) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of the assessee on or after the 1st day of April, 2021; or (b) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a search under section 132 or requisitioned under section 132A, in the case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or (c) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or documents, seized in a search under section 132 or requisitioned under section 132A, in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee; or (d) the Assessing Officer has received any information under the scheme notified under section 135A pertaining to income chargeable to tax escaping assessment for any assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the time or extended time allowed to the assessee, as per show-cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded. x. Further, as per 4th proviso to section 149, where immediately after the exclusion of the period referred to in the immediately preceding proviso (i.e. 3rd proviso), the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A is less than seven days, such remaining period shall be extended to seven days and the period of limitation under this subsection shall be deemed to be extended accordingly. xi. The AO has to consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in clause (b) of section 148A before passing the order u/s 148A(d). xii. The AO shall mandatorily pass a speaking order u/s 148A(d) in all cases with the prior approval of the specified authority ( Annexure- A2) for such order u/s. 148A (d), except in the cases covered in Para 2.1 (iii) above of these guidelines, irrespective of whether issuance of notice u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of notice specified shall not apply for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision or by a Court in any proceeding under any other law. 5. As far as possible the Assessing officer to make endeavor that at the stage of compliance of provisions u/s 148A/ issuance of notice u/s 148, all issues even if spread over more than one assessment year may be taken up simultaneously e. information suggesting escapement of income relating to a particular assessee for more than one AY may be reopened at one go. 6. The Assessing officer, as far as possible, may dispose all such pending matters relating to passing of orders u/s 148A(d)/ issuance of notice u/s 148 on a continuous basis rather than towards close to time barring date. This will enable passing of reasoned orders. Supervisory authorities are hereby advised to keep an effective supervision and monitor the progress of disposal of these work on continuous basis. 7. The present guidelines are only indicative and not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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