Yellaiah Setty vs Assistant Commissioner Of Income Tax And 2 Others

Heard Mr. A.V.A.Siva Kartikeya, learned counsel for the petitioner and Mr. B. Narasimha Sarma, learned counsel for the respondents.

By filing this petition under Article 226 of the Constitution of India, petitioner seeks quashing of order dated 08.04.2022 passed by respondent No.1 under Section 148A(d) of the Income Tax Act, 1961 (briefly, ‘the Act’ hereinafter), for the assessment year 2015-16.

Petitioner is an assessee under the Act. For the assessment year 2015-16, a notice dated 22.03.2022 was issued by respondent No.1 under Section 148A(b) of the Act. As per the said notice, it was stated that information received by respondent No.1 suggested that income chargeable to tax for the assessment year 2015-16 had escaped assessment within the meaning of Section 147 of the Act. The details of information and enquiry were enclosed to the said notice as an Annexure.

Petitioner submitted reply. However, by the impugned order dated 08.04.2022 reply of the petitioner was not accepted. Deciding that it is a fit case for issuance of notice under Section 148 of the Act, the impugned order was passed mentioning that prior approval was obtained from the specified authority.

According to learned counsel for the petitioner, respondent No.1 had gone beyond the four transactions mentioned in the Annexure to the notice dated 22.03.2022. Respondent No.1 had gone into the turnover of the petitioner as declared in its return. Had this aspect been brought to the notice of the petitioner by way of the notice, petitioner would have met the above queries of respondent No.1. He also submits that respondent No.1 took the view that petitioner had failed to substantiate the nexus between withdrawn cash and non-cash credits, again pointing out that this was not the subject matter of the show cause notice.

In the hearing, learned counsel for the petitioner has drawn our attention to Section 151A of the Act which deals with faceless assessment of income escaping assessment and submits that on the basis of the above statutory provision, notification dated 29.03.2022 was issued by the Central Board of Direct Taxes. As per the said notification, insofar assessment, reassessment or recomputation under Section 147 of the Act or issuance of notice under Section 148 of the Act is concerned, the same should be through automated allocation, but in the present case the impugned order was passed in a physical manner.

Learned Standing Counsel for Income Tax Department submits that the writ petition has been filed at a stage prior to issuance of notice under Section 148 of the Act. He submits that petitioner would have ample opportunity to have his say during the course of reassessment proceedings. Even if the petitioner remains aggrieved thereafter, he would have a hierarchy of remedies. Therefore, no interference is called for at this stage. Insofar notification dated 29.03.2022 is concerned, learned Standing Counsel submits that the notice under Section 148A(b) of the Act was issued prior thereto on 22.03.2022 to which learned counsel for the petitioner submits that the impugned order was passed thereafter.

We have given our thoughtful consideration to the rival submissions made at the bar.

This is a case of proposed reassessment. In view of the newly inserted Section 148A in the Act, there has been a paradigm shift in the procedure followed for reassessment under Section 147 of the Act. Prior to issuance of notice under Section 148 of the Act, a notice under Section 148A(b) of the Act is required to be issued enabling the person concerned to submit reply, whereafter the assessing authority upon receipt of approval from the specified authority is mandated to pass an order under Section 148A(d) of the Act, whether the case is fit for reopening or not. Once it is decided that it is a case fit for reopening, consequential notice under Section 148 of the Act is issued.

In the above backdrop, the order under Section 148A(d) of the Act is at a stage prior to issuance of notice under Section 148 of the Act. Unless glaring omissions are demonstrated or the conditions precedent for exercise of the power to reopen assessment are not complied with, a writ Court would not ordinarily interfere with an order passed under Section 148A(d) of the Act inasmuch as the proceedings is at a very nascent stage even prior to issuance of the statutory notice under Section 148 of the Act.

Further, we are of the view that contentions raised by the petitioner can very well be raised in the reply to the notice issued under Section 148 of the Act. At this stage, preempting the authorities from proceeding further on the grounds urged in the writ petition would not be proper. We, therefore, decline to interfere in the matter.

Writ petition is accordingly dismissed.

Miscellaneous applications pending, if any, shall stand closed. However, there shall be no order as to costs.