Reassessment quashed as alleged transaction were reflected in Income Tax Returns

Reassessment quashed as the alleged transaction were clearly mentioned, reflected and contained in the Income Tax Returns filed by the assessee.

In a recent judgment, Hon’ble High Court of Karnataka quashed reassessment proceedings as the transactions referred to in notice u/s 148A(b) and order passed u/s 148A(d) were clearly mentioned, reflected and contained in the Income Tax Returns by the assessee.

ABCAUS Case Law Citation:
4483 (2025) (03) abcaus.in HC

In the instant case, the Petitioner assessee had filed a Writ Petition challenging the order passed by the Assessing Officer (AO) under section 147 and 148A(d) of the Income Tax Act, 1961 (the Act) along with notice issued u/s 148A(b) and notice under section 148 of the Act. The assessee had also prayed for the quashing of Penalty orders and notices issued u/s 271AAC(1) and section 270A of the Act.

Before the Hon’ble High Court, the Petitioner invited attention to the impugned notices for reopening issued under Section 148A(b) of the Income Tax Act in order to point out that the AO had committed error in alleging that the two transactions referred to in the said notice were not disclosed in the Income Tax Return filed by the petitioner.

It was submitted that the said two transactions were reflected in the Income Tax Return and consequently, AO clearly erred in coming to the erroneous conclusion that the said transactions were not disclosed in the Income Tax Returns.

It was submitted that due to bonafide reasons, unavoidable circumstances and sufficient cause, petitioner submitted reply after due date, as a result of which, AO proceeded to pass the impugned order under Section 148A(d) of Income Tax Act pursuant to which impugned notices under Section 148 of the Act was issued followed by the impugned communication and orders.

The Hon’ble High Court observed that the said two transactions referred to by the AO in the impugned notice which are further reiterated in the impugned order passed under Section 148A(d) and also in the subsequent impugned correspondences and orders, were clearly mentioned, reflected and contained in the Income Tax Returns and consequently, the Income Tax Department clearly fell in error in coming to the erroneous conclusion that aforesaid transactions were not stated or reflected in the Income Tax Return, which was a factually incorrect conclusion and unsustainable in law. 

The Hon’ble High Court further observed that subsequent orders etc., were also contrary to the material on record and on this ground also, impugned orders deserved to be set aside and Income Tax Department was not justified in initiating the impugned proceedings against the petitioner, which was without jurisdiction and authority of law and deserved to be quashed.

Accordingly, the all impugned orders / notices were quashed.

Download Full Judgment Click Here >>

• CA Misconduct – Order quashed as judgment not passed by same members who heard arguments.
• Deceased homemaker can not be considered as dependant for award of compensation under MV Act – SC
• CIT notice u/s 263 quashed as AO rightly took DVO value of property as actual sale price
• Extension of timeline for implementation of Ship To GSTIN & Voluntary Closure of E-Way Bill functionalities
• No protective addition required when additions is confirmed in hands of searched person – ITAT