Section 148A(b)

Section 148A(b) — the law in short

What the courts have decided on section 148A(b), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Anshul Jain v PCIT Supreme CourtHelps department
  The order under section 148A(d) rejects everything I said and the section 148 notice has followed. Can I take it straight to the High Court?
  Usually not. The Supreme Court dismissed the assessee's petition against a High Court order refusing to interfere at that stage, saying that the notices had been issued after his objections were considered and that any grievance on the merits had to be taken to the Assessing Officer in the reassessment proceedings. It is an order dismissing a special leave petition with brief reasons, on a record that lists no counsel for the Revenue, and the same Court took a different line four months later in Red Chilli International Sales, where it set aside a refusal to entertain a writ that rested only on the existence of an alternative remedy. Read it as the ordinary rule and not as a bar, and read it today alongside section 147A, because what happens inside a reassessment is the most disturbed part of the Act.
• Sapphire Foods India Ltd v ACIT High CourtHelps taxpayerNo later treatment found
  The officer has reopened my scrutiny assessment because the audit party disagreed with what he allowed. Is that a fresh look or a change of opinion?
  On this decision, a change of opinion. Where the Assessing Officer had all the relevant material during the original scrutiny assessment, a reassessment driven by an audit objection on that same material is an impermissible review, and reopening on the same material is not permitted. The Court also held the notice barred by limitation because the extended period was unavailable in the absence of a failure to disclose material facts.
• Deloitte Consulting India Pvt Ltd v Assessment Unit, NFAC High CourtHelps taxpayerNo later treatment found
  Your APA year has been reopened and the officer has himself re-examined whether you complied with the APA. Can he do that without a compliance audit by the Transfer Pricing Officer?
  No. Rule 10P places the compliance audit of an APA with the Transfer Pricing Officer having jurisdiction over the assessee, for each year covered by the agreement. The assessment unit had no jurisdiction to examine APA compliance on its own or to make a reassessment on that footing, and the addition of Rs 106,47,00,730 it made on that basis was beyond jurisdiction. The reopening failed independently on the s.151 sanction and because the notice was issued by the jurisdictional officer rather than the faceless assessing officer.
• Mukundbhai Manubhai Patel v ACIT High CourtHelps taxpayerNo later treatment found
  I bought mutual fund units, took the dividend the same day and booked a short-term loss. The department calls it fictitious and has reopened. Can it?
  Not on that material alone. The Gujarat High Court quashed a s.148A(d) order and s.148 notice where the reopening rested on an allegation that the fund house had manipulated its distributable surplus: purchasing units and earning dividend on the same day is not impermissible, and allegations against the fund manager cannot be extended to the investor without something showing he knowingly participated.
• Bhatia Propcon Pvt Ltd v DCIT (Delhi High Court) — citing section 50C when section 43CA was the right provision does not defeat the reassessment High CourtHelps departmentNo later treatment found
  The reopening notice says my sale below circle rate attracts section 50C, but I am a developer and the floor sold was stock in trade, so section 50C cannot apply. Does that error destroy the notice?
  No. The Delhi High Court held that sections 50C and 43CA both contain a deeming provision imputing to the asset transferred a value ascribable to it even where it is sold below the circle rate — the first for capital assets, the second for assets other than capital assets — so the Assessing Officer had sufficient reason to believe income had escaped assessment. A misapprehension as to which of the two applied was not a jurisdictional error invalidating the section 148 proceedings, and the writ petition was dismissed.
• Sonansh Creations P Ltd v ACIT High CourtHelps taxpayerNo later treatment found
  The officer says I took accommodation entries and I say I received nothing. Must he have material that the entries exist before he reopens?
  He must. The Delhi High Court set aside a s.148A(d) order and the consequent notice where the information was that eleven entities controlled by an entry operator had given the company fictitious loans, the company denied receiving anything from them and disclosed the bank accounts it operated, and the officer never referred to any material showing that the money had in fact come into those accounts. The Court rejected the contention that at the s.148A(d) stage the officer need form no opinion on the genuineness or veracity of the information; he must be reasonably certain that the alleged entries exist, though he need not conclusively decide that they are accommodation entries. Liberty was reserved to issue a fresh notice if material is found.
• Late Lal Chand Verma (through legal heir) v Union of India High CourtHelps taxpayer
  A notice arrives in the name of someone who has died. Is it valid?
  Not where the proceedings were never begun in their lifetime. Section 159(2)(b) requires the notice to go to the legal representative. Serving a person who no longer exists is a jurisdictional failure and s.292B cannot cure it.
• International Hospital Ltd v DCIT High CourtHelps taxpayerNo later treatment found
  The department is now citing Mahagun Realtors to say an assessment on the amalgamating company is curable. Has the Supreme Court moved away from Maruti Suzuki?
  On the Delhi High Court's considered view in this batch, no. Mahagun Realtors turned on the conduct of that assessee — who suppressed the amalgamation at search, filed a return in the amalgamating company's name recording 'not applicable' against business reorganisation, and litigated throughout in that name — and did not dilute or strike a discordant chord with Maruti Suzuki. Where the successor did tell the department of the merger and the notice or order still went out in the dead company's name, the defect remains fatal.
• Rahul Sachan v Income Tax Officer High CourtHelps department
  The officer passed the order under section 148A(d) without answering a single point in my reply. Can I get the reassessment quashed on that ground alone?
  No, not on that ground alone. The Allahabad High Court held that section 148A does not oblige the Assessing Officer to deal with objections pointwise or to record detailed reasons. The old requirement of recording a 'reason to believe' has been done away with and replaced by a lighter, more subjective decision that it is a 'fit case' to issue a notice under section 148, on information that suggests escapement. The officer must not act whimsically, on extraneous material, or in ignorance of the reply, but an overall consideration is enough. Reading in a duty to give reasons for rejecting each objection would reintroduce 'reason to believe' by the back door. The petition was dismissed, with all merit defences left open.
• Sevensea Vincom P Ltd v PCIT High CourtHelps taxpayerNo later treatment found
  They reopened AY 2016-17 in 2022 for under Rs 50 lakh. Is the notice time-barred?
  Yes. The Jharkhand High Court held the three-year period for AY 2016-17 ended on 31 March 2020, and because the Department itself alleged escapement of only Rs. 39,21,450 the extended ten-year window in s.149(1)(b) was unavailable. The whole proceeding was without jurisdiction.
• Ganesh Dass Khanna v ITO High CourtHelps taxpayer
  I got a section 148 notice for 2016-17 where the alleged escaped income is under Rs 50 lakh. Is three years the limit, or can they use ten?
  Three years. The Delhi High Court held that where the escaped income is below Rs 50 lakh, clause (a) of section 149(1) applies and no notice under section 148 may issue after three years from the end of the relevant assessment year. It quashed the section 148A(d) orders and the consequent section 148 notices for assessment years 2016-17 and 2017-18 in a batch of writ petitions. It also declared bad in law paragraphs 6.1 and 6.2(ii) of the CBDT Instruction of 11 May 2022, to the extent they propound the travel back in time theory, holding those paragraphs ultra vires section 119 and section 149(1) and, in any event, vague.
• Shailendra Kumar Agarwal v Income Tax Officer, Ward 1, Rourkela High CourtCuts both waysNo later treatment found
  Can I go to the writ court against a s.148A(b) notice that simply asserts my s.80GGC claim is bogus, when the deduction was already examined in the completed assessment?
  The Orissa High Court entertained exactly that writ petition and stayed the notice. It required the Revenue to be heard on how a claim for deduction that had been made and assessed, being a donation to a registered unrecognised political party, could be said to have escaped assessment, and the petitioner argued change of opinion on the authority of CIT v Kelvinator of India Ltd. This is an interlocutory order: it decides nothing and contains no holding.
• Manipal Education and Medical Group India Pvt Ltd v ACIT — where the s.148 reassessment falls, the s.144BA(1) and (2) GAAR notices issued inside it fall with it as consequential High CourtHelps taxpayerNo later treatment found
  The GAAR reference in my case was made inside a reassessment. If I succeed in getting the s.148A(d) order and the s.148 notice set aside, do the s.144BA notices go too, or do I have to fight them separately?
  They go with it. In a writ petition in which the Revenue itself accepted, through the Additional Solicitor General, that the matter should be remanded to the stage before the s.148 notice because the principles of natural justice had been violated, the Karnataka High Court set aside the s.148A(d) order and the s.148 notice, both dated 31 March 2022, and then quashed "all actions initiated pursuant to the above under Section 142(2A), Section 144BA(1) and Section 144BA(2) of the Act, being consequential" — naming a notice dated 21 March 2023, an order dated 30 March 2023, a notice dated 24 March 2023 for invocation of Chapter X-A and a further notice dated 26 April 2023. The matter was remanded to the Assessing Officer to begin again from the s.148A(b) stage, with thirty days to reply, and all contentions of both parties kept open.
• Parmesh Chand Yadav v ITO High CourtHelps departmentSuperseded by amendment
  The AO has issued a s.148A notice on crypto exchange data showing Rs 4.65 crore of transactions. I have given my bank statements and my return — is that enough to stop the s.148 notice?
  No, not on these facts. The Court held that bank statements alone do not verify what the crypto transactions were, that the assessee ought to have produced the crypto currency ledger, and that the officer's brief consideration of the reply satisfied s.148A. The writ against the s.148 notice failed, with liberty to produce the ledger in the reassessment itself.
• Anil Kumar Malhotra v Union of India High CourtHelps departmentNo later treatment found
  My stay application was rejected on the 20% ground while my appeal is pending. Can I go straight to the High Court under Article 226 saying the assessment breached natural justice?
  This Court said no. Having already filed the statutory appeal, the assessee cannot simultaneously attack the assessment order in writ under the guise of challenging the rejection of his stay application; that is resort to two forums at once. The remedy against the rejection is the review route in clause 4(C) of the Office Memorandum dated 29.02.2016 read with a revision under s.264, and the writ petitions were dismissed with liberty to take that route.
• Firey Ram Bhati v ITO — rural agricultural land is not a 'capital asset', so the deeming provision in section 56(2)(x) cannot be invoked on a purchase below circle rate ITATHelps taxpayerNo later treatment found
  My client, a farmer, bought agricultural land well below circle rate with his land-acquisition compensation. The officer has added the difference under section 56(2)(vii)(b). Is agricultural land within the charge at all?
  The Delhi Bench held it is not. Following its own coordinate-bench decision in Ramanarayan, and on the footing that the lower authorities had never doubted that what was bought was agricultural land, the Bench allowed the appeal and deleted the addition of Rs 61,02,500. The reasoning is that agricultural land of that description falls outside the definition of capital asset, and 'property' in the Explanation to the clause means the listed capital asset of the assessee.
• Hirabhai Karshanbhai Solanki v ITO, Rajkot ITATHelps taxpayerNo later treatment found
  In a s.147 reassessment the Assessing Officer has thrown out my s.80U disability deduction along with 80C and 80TTA because I produced nothing during the assessment. Can I still prove it in appeal?
  Yes, on this order. The Rajkot Tribunal deleted the whole Chapter VI-A disallowance where the assessee produced LIC premium receipts and notified mutual fund receipts for s.80C, and for s.80U produced a disability certificate issued by the competent medical authority — the assessee also appearing personally before the Tribunal — holding that "such evidence cannot be ignored".
• CBDT Instruction No. 1/2022 — the document the whole Ashish Agarwal exercise was run on CBDT Circulars & InstructionsHelps departmentPartly overruled — read this first
  My reassessment for an old year was restarted in 2022 on the strength of a Board instruction rather than a fresh notice. What does that instruction actually say, and how much of it is the Supreme Court's?
  This is the instruction, issued under s.119 a week after Union of India v Ashish Agarwal, that told every Assessing Officer how to work out that judgment on the roughly ninety thousand notices issued under the old reassessment law between 1 April 2021 and 30 June 2021. It directs that the judgment applies to all those notices whether or not they were challenged; that the notices travel back to their original dates and new s.149 is then applied at that point, so a fresh s.148 notice may issue for assessment years 2013-14 to 2015-16 only under s.149(1)(b) and for 2016-17 and 2017-18 under s.149(1)(a); that information and material need not be given at all where escaped income for 2013-14 to 2015-16 is less than fifty lakh rupees; and that in the remaining cases the material was to be supplied by 2 June 2022, the assessee had two weeks to reply, and an order under s.148A(d) was to follow with the approval of the specified authority under s.151. Three of those directions go further than the judgment does, and the courts have said so.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.