AO Can’t Add New Reasons While Passing Sec. 148A(d) Order Without Giving Opportunity to Assessee to Explain Same | HC

Case Details: Packirisamy Senthilkumar v. Government of India - [2023] 153 taxmann.com 640 (Madras)

Judiciary and Counsel Details

• • Ms P.T. Asha, J.
  • A.G. Sathyanarayana for the Petitioner.
  • N. Dilip Kumar, Sr. Standing Counsel for the Respondent.

Facts of the Case

Assessee, a non-resident Indian, purchased a property in India, for which tax was deducted, and Form No. 26QB was filed. However, he had not filed the return of income for the relevant assessment year. Upon receiving notice from the Assessing Officer (AO) evidencing the escaped income, the assessee submitted a detailed reply and documentary evidence.

Dissatisfied with the reply, the AO passed an order under section 148A(d) against the assessee. However, while passing the order, the AO dealt with the assessee’s loan account, employment details, salary certificate, etc.

Aggrieved by the order, the assessee filed a writ petition to the Madras High Court.

High Court Held

The High Court held that the notice to the assessee was based only on the reason for purchasing such property. In contrast, in the impugned order, the AO had gone on to deal with the loan account, the employment details, the salary certificate, etc., of the assessee. In the order, the AO added new reasons, and the assessee had not been allowed to answer and explain the same.

Therefore, taking into account that the very basis of the impugned order was erroneous, and AO proceeded to give new reasons, which the assessee has not been allowed to defend, the impugned order was set aside.

The notice issued under section 148A(b) shall be treated as an additional show-cause notice and the assessee shall submit his explanation to this additional show-cause notice. AO shall proceed to pass order after giving an opportunity of personal hearing to the assessee.