Thorough Examination of Merits of Info. in Possession of AO Isn’t Required While Passing Order u/s 148A(d) | HC

Case Details: Vivek Saran Agarwal vs. Union of India - [2023] 157 taxmann.com 80 (Allahabad)

Judiciary and Counsel Details

• • Pritinker Diwaker, CJ & Ashutosh Srivastava, J.
  • Sharad Tandon, Punit Khare & Shubham Tandon for the Petitioner.
  • Gaurav Mahajan & Naveen Chandra Gupta, A.S.G.I. for the Respondent.

Facts of the Case

In the instant case, the assessee challenged the order passed under Section 148A(d) and the issuance of consequential notice under Section 148. Assessee contended that AO proceeded with passing the order under section 148A(d) despite the filing of response.

High Court Held

The High Court held that consideration at the stage of passing an order under section 148A(d) is limited to ascertainment of information with the Assessing Officer (AO) that the income of the assessee has escaped assessment to tax. The final determination on the question of whether the income of the assessee has actually escaped assessment is to be made after notice under section 148 by passing an order of assessment or reassessment under section 147.

The Income-tax Act did not contemplate any detailed adjudication on the merits of information available with the AO at the stage of passing an order under section 148A(d). At this stage, there is a specific purpose for not introducing any further enquiry or adjudication in the statute on the correctness or otherwise of the information.

A detailed procedure has been provided under section 148 for issuance of notice whereafter the assessing authority has to determine, in the manner specified, whether income has escaped assessment, and the defence of the assessee, on all permissible grounds, remains open to be pressed at such stage. The ultimate determination made by the assessing authority under section 147 for reassessment is otherwise subject to appeal under section 246A.

Merits of the information referable to section 148A thus remain subject to the reassessment proceedings initiated vide notice under section 148. For this reason, issues that require determination at the stage of reassessment proceedings and in respect of which departmental remedy is otherwise available are not required to be determined at the decision stage by the assessing authority under section 149A(d). The scope of the decision under section 148A(d) is limited to the existence or otherwise of information that suggests that income chargeable to tax has escaped assessment.

Accordingly, section 148A(d) order and notice issued under section 148 do not justify interference under article 226 of the Constitution of India. The assessee can challenge these during the reassessment proceedings triggered by the notice under section 148.

List of Cases Referred to

• • Union of India v. Ashish Agarwal [2022] 138 taxmann.com 64/286 Taxman 183/444 ITR 1 (SC) (para 3)
  • CIT v. Kelvinator of India Ltd. [2010] 135 Taxman 461/265 ITR 562 (SC) (para 6)
  • Awlesh Kumar Singh v. Union of India [2022] 139 taxmann.com 502/287 Taxman 596 (All.) (para 6)
  • Deepak Kumar Yadav v. Pr. CIT [2023] 151 taxmann.com 376/293 Taxman 694 (All.) (para 8)
  • Anshul Jain v. Pr. CIT [2022] 143 taxmann.com 38/289 Taxman 239/449 ITR 256 (SC) (para 12).