Assessee Attempted To Drag Matter Knowing Well That Assessment Will Be Time Barred: Calcutta High Court Upholds Reassessment

The Calcutta High Court has held that the assessee had repeatedly sought adjournments, which would show that the assessee attempted to drag the matter along, knowing well that the assessment would be time-barred.

The bench of Chief Justice T.S. Sivagnanam and Justice Supratim Bhattacharya have observed that the provision of Section 148A of the Act has been scrupulously followed by the assessing officer, and there is no error in the decision-making process of the court to interfere.

The petitioner or assessee has submitted that the respondent assessing authority failed to consider that information for several assessment years cannot be called for, as has been done in the notice issued under Section 148A(b) of the Income Tax Act dated March 31, 2023. No information could be sought separately for the assessment year 2018–2019 since the appeal is pending before the appellate authority and the reassessment proceedings in relation to the year have been challenged by the appellant before the court, and by order, the matter was remanded back to the assessing officer.

The assessee contended that the notice dated March 31, 2023, issued under Section 148A(b) cannot be modified or amended by a subsequent communication, and the only option available was to drop the proceedings and issue a fresh notice if it is permissible under law. The respondent assessing officer did not conduct any independent investigation or inquiry under Section 148A(a) before initiating proceedings by issuance of a notice. The re-assessment proceeding is time-barred and cannot be carried on against the appellant.

The assessee contended that notice under Section 148A(b) could not have been issued without conducting an independent inquiry in terms of Clause (a) of Section 148. Section 148A was inserted by the Finance Act, 2021, with effect from April 1, 2023, and deals with conducting inquiries and providing an opportunity before issuing notice under Section 148. The assessing officer shall, before issuing any notice under Section 148A(a), conduct an inquiry, if required, with the prior approval of specified authority with respect to the information that suggests that income chargeable to tax is escaped assessment. Thus, the conduct of the inquiry has not been made mandatory but discretionary and has been vested with the assessing officer, as the provision uses the expression “if required." In the event the assessing officer proposes to conduct an inquiry, or, in other words, if, in the opinion of the assessing officer, an inquiry is required to be conducted, such inquiry can be conducted with the prior approval of the specified authority with respect to the information that suggests that the income chargeable to tax has escaped assessment.

The assessing officer, while dealing with this objection raised by the assessee, stated that the information was specific and therefore no inquiry under Section 148A(a) of the Act was deemed to be required. The finding rendered by the assessing officer cannot be stated to be erroneous for the court to interfere.

The court has held that the provision of Section 148A has been scrupulously followed by the assessing officer, and there is no error in the decision-making process of this court to interfere.

Counsel For Petitioner: Pranit Bag

Counsel For Respondent: Vipul Kundalia

Citation: 2023 LiveLaw (Cal) 22

Case Title: Champa Impex Private Limited Versus Union Of India And Others

Case No.: A.P.O. NO. 124 OF 2023 (IA NO: GA/1/2023)

Click Here To Read The Order