In this case the AO had issued a notice under section 148A(1) of the Act alleging that the assessee had undertaken transactions with Reliance General Insurance Company Ltd. which were not in accordance with the provisions of IRDAI and that income chargeable to tax had escaped assessment. Along with the notice, certain information, dissemination notes and materials relating to search proceedings conducted in the case of third parties were supplied. The assessee filed detailed replies explaining that the receipts from Reliance had been duly accounted for and offered to tax. It was also pointed out that neither the dissemination notes nor the statements recorded during the search proceedings referred to the assessee. However, while passing the order under section 148A(3), the AO shifted the basis of reopening and alleged that the assessee had failed to explain receipt of `1.02 crore from Prudent Insurance Brokers Pvt. Ltd. and concluded that such amount represented unaccounted income which had escaped assessment. Consequently, notice under section 148 was issued.<\/p>\n
Hon\u2019ble Calcutta High Court quashed the order passed under section 148A(3) and consequential notice issued under section 148 by holding that the notice issued under section 148A(1) specifically alleged irregular transactions between the assessee and Reliance General Insurance Company Ltd. Therefore, the assessee was required to explain only such transactions and was entitled to analyse the material supplied in the context of the allegations contained in the notice. The Court further observed that the AO, while passing the order under section 148A(3), completely changed the basis of reopening and proceeded on the alleged transactions between the assessee and Prudent Insurance Brokers Pvt. Ltd. Such a course was impermissible in law. An order passed under section 148A(3) cannot travel beyond the allegations contained in the show-cause notice issued under section 148A(1). By relying on a new ground not disclosed in the notice, the AO violated the principles of natural justice and deprived the assessee of an opportunity to respond. The information relied upon by the Revenue did not establish any rational nexus or live link between the material available with the Department and the conclusion that income had escaped assessment. The dissemination note did not even name the assessee and the statements recorded during the search proceedings contained no reference whatsoever to the assessee. Mere reference to transactions with an intermediary, without any supporting material, could not constitute information suggesting escapement of income. Accordingly, the order passed under section 148A (3), and the consequential notice issued under section 148 are invalid in the eyes of law, and the same are quashed. (AY. 2018-19)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 148A: Reassessment-Conducting inquiry, providing opportunity before issue of notice-Order under section 148A (3) was passed on a ground not forming part of notice issued under section 148A (1)-Notice issued under section 148 pursuant to such order passed under section 148A (3) of the Act is bad in law. [S. 148, 148A(b), 148A(d),148A(3), Art . 226] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[21],"tags":[],"class_list":["post-64418","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-gL0","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/64418","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=64418"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/64418\/revisions"}],"predecessor-version":[{"id":64419,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/64418\/revisions\/64419"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=64418"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=64418"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=64418"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}