New allegation added in order passed u/s 148A(d) not present in show cause notice u/s 148A. High Court declines interference.
In a recent judgment, Allahabad High Court has declined to entertain a Petition challenging addition of a new allegation in order passed u/s 148A(d) in reassessment proceedings.
ABCAUS Case Law Citation:
ABCAUS 3862 (2024) (02) HC
In the instant case, the assessee had filed a Writ Petition before the Hon’ble Allahabad High Court challenging the reassessment proceedings initiated against the petitioner under Section 148 of the Income Tax Act, 1961 (the Act).
The Petitioner urged that initial show cause notice under Section 148A was issued on a solitary ground that the petitioner had made cash purchases from a particular seller at the value exceeding Rs. 20,000/-. That expenditure was proposed to be disallowed under Section 40A(3) of the Act.
The petitioner denied the allegation and relied on audited balance sheet, tax audit report, income tax return, purchases ledger account, ledger account of the creditor and bank statement.
It was also argued that at the stage of rejecting the preliminary objections of the assessee, the Assessing Officer (AO) by means of order passed under Section 148A(d) of the Act, added a new ground of purchases having been made outside the books of accounts.
It was submitted that there was no cogent material to proceed against the petitioner. It was contended that the allegation of purchases made outside the books of accounts was never levelled at the stage of issuance of the first show cause notice but in order passed under Section 148A(d) of the Act.
The Hon’ble High Court observed that under the amended provisions of reopening, it is no longer, the obligation of the Assessing Authority to record a “reason to believe“, before assuming jurisdiction to reassess an assessee. Instead, a bonafide satisfaction reached as to escapement of income made suffice the test of valid assumption of jurisdiction.
The Hon’ble High Court further observed that specific allegation was made against the petitioner of having made cash purchases in excess of Rs. 20,000/-. The reply furnished does not establish that either the alleged purchases made by the petitioner were paid through banking channel or that no purchases were made by the petitioner from such seller.
The Hon’ble High Court opined that what may have been the total quantum of purchases from the said creditor and what part of it may have been accounted against the payment made through banking channel may remain to be verified at the stage of reassessment.
The Hon’ble High Court stated that for the purposes of assumption of jurisdiction, all that is required to be seen is, if the satisfaction is bonafide. To that end, there was no dispute that the authority had conducted a survey against the creditor. In that information it was revealed that cash purchases made by the petitioner were valued in lakhs.
The Hon’ble High Court opined that in absence of any objection as to existence of information as to cash purchase and there being no material available to reach further satisfaction that such payments were made through banking channel, all other pleas raised may remain to be examined, on merits, in the face of reassessment proceedings that are still pending.
Accordingly, the Petition was dismissed leaving it open to the petitioner to raise all objections and making it obligatory on the revenue authorities to deal with them, on merits, by affording opportunity of hearing.
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