PCIT approval for reopening was without application of mind as despite response it said no reply was submitted by the assesse u/s 148A(b) of the Act
In a recent judgment, Hon’ble Allahabad High Court has quashed order u/s 148A(d) and notice issued u/s 148 observing that PCIT approval for reopening was without application of mind as despite response it said no reply was submitted by the assesse u/s 148A(b) of the Act.
ABCAUS Case Law Citation:
4253 (2024) (09) abcaus.in HC
In the instant case, the Petitioner/assessee had filed a Writ Petition praying quashing of order passed u/s 148A(d) and notice u/s 148 for re-assessment of the case of petitioner u/s 147 and also to quash the approval order given given by PCIT u/s 151 the Income Tax Act, 1961 (the Act).
The petitioner filed his Income Tax Return under Section 139(1) of the Act which was accepted. However, for the same Assessment Year a notice under Section 148A(b) of the Act was issued by the Jurisdictional Assessing Officer (AO).
The reason for issue of notice was that on the scrutiny of the papers of a alleged fraudulent firm it was observed by the authorities that the said firm had made few sale transactions with the petitioner.
A Notice was issued to the petitioner, alleging that department was, prima facie, of the opinion that the petitioner was involved in bogus purchase from the said firm.
The assessee filed a detailed reply and also asked for further opportunity to produce evidence in case a AO was not satisfied with the reply. The assessee submitted the tax invoices as well as e-way bills were submitted showing the total cost of purchase including portion of Central GST and State GST. The petitioner’s tax invoices showed the GSTIN of the seller and only thereafter the e-way bills were generated for such purchases. All transactions were made through bank account and no cash transactions were undertaken.
However, the petitioner’s reply was not considered at all and the order under under Section 148 A(d) of the Act was issued with the approval of Principal Commissioner Income Tax (PCIT) under Section 151 of the Act.
The Hon’ble High Court observed that in the approval letter, it had been mentioned that no reply was submitted by the petitioner/assessee under Section 148A(b) of the Act and it also mentioned that draft order under Section 148A(d) of the Act of the AO had been perused by the PCIT.
The Hon’ble High Court opined that PCIT had given approval without application of mind because had the draft order been read, it would have shown that reply of the assessee was scanned and made a part of the order under Section 148A(d) of the Act in the columns meant for mentioning whether reply was submitted by the assessee it was mentioned that the assessee had not submitted any reply.
The Revenue contended that order dated 148A(d) is only re-opening assessment and proper opportunity shall be given to the assessee during the reassessment proceedings to place its case. The Income Tax Department placed reliance of the judgment of Hon’ble Supreme Court and submitted that not only reply of the assessee was quoted in the order passed under Section 148A(d) of the Act but it was also considered by AO and compared with the information given by the revenue authorities concerned.
The Hon’ble High Court observed that the judgment relied upon by the ITD does not say that AO shall issue notice under Section 148A(b) and order under Section 148A(d) of the Act without application of mind and without jurisdiction and that the Principal Commissioner, Income Tax, shall issue approval order under Section 151 of the Act also without application of mind against the assessee.
Accordingly, the order under Section 148A(d) and notice issued under Section 148 of the Act both were quashed and the matter was is remitted back to pass appropriate orders after considering the reply of the assessee.
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