The show-cause never gave me the material it relied on and the officer annexed it only to the order rejecting my reply - what does that actually get me?
The client is a private limited company trading in steel tubes, assessed at a circle in Ludhiana. Its AY 2018-19 assessment was completed under s.143(3) on 24 December 2020 on returned income, after the loan accounts now in question had been produced. A notice under s.148A(b) dated 8 August 2024 was served by email on 9 August 2024. It says that information available as per the Insight Portal under the risk management strategy formulated by the Board, and an appraisal report of the Investigation Wing, shows that the company received accommodation entries in the form of unsecured loans of Rs 1,84,00,000 from four named entities controlled by an entry provider whose premises were searched. Nothing was annexed: no statement, no appraisal report or extract, no bank trail, no PANs. The reply window given was seven days, to 16 August 2024. The reply went in on that date asking for the material and the statement relied on, and for thirty days from the date of supply, annexing the loan confirmations, the bank statements showing receipt and repayment by RTGS, the lenders' return acknowledgements and audited accounts, and the 2020 assessment order. The order under s.148A(d) dated 30 August 2024 disposes of the reply in three paragraphs, annexes for the first time a four-page extract of the appraisal report and an unsigned statement recorded under s.132(4), and records that approval was obtained on 29 August 2024 without naming the rank. The s.148 notice issued the same day. A writ filed on 24 September 2024 is now listed for final hearing, further proceedings having been stayed on 26 September 2024.
Before anything else, reduce the file to a two-column table: what the s.148A(b) notice described, and what the s.148A(d) order annexed. Every useful point here lies in the difference between those columns, and it has to be shown as a document, not asserted. Take the portal downloads with their timestamps the same week. The case is that the company was asked to answer an appraisal report it had never seen, and that the report surfaced only in the document rejecting its answer; unless that comparison is on the record in a form the Court can read in a minute, it reads as a complaint about procedure rather than a denial of opportunity.
The information or material that triggered the proceeding has to be furnished to the assessee. A High Court has set aside the s.148A(d) order and the consequential s.148 notice on exactly that footing, where the notice referred to information the officer never showed. Another High Court, on facts closer to these, held the Department duty-bound and mandatorily required to supply all material information, the enquiry conducted and the supporting documents along with the s.148A(b) notice, and held that a multi-page narration with no enclosures does not discharge that obligation. Both entries are marked no later treatment found, which means a search was run and nothing adverse came back; that is weaker than good law and worth a word where, as here, the ground is the whole case. The point to make is that supplying the material with the order is not supplying it at all, because the section gives the assessee an opportunity to answer the material before the officer decides, not after.
A High Court has described the outcome in terms: the order and the notice go, and the matter starts again from the show-cause stage. In that case the assessee had already told the officer, in answer to a s.133(6) notice, a fact the s.148A(d) order simply ignored, and the order and the same-day s.148 notice were both set aside. Another High Court quashed a s.148A order and the s.148 notice as passed without application of mind, where the officer repeated an allegation of non-response while ignoring the documents actually filed, and remanded. What does travel with the set-aside order is everything built on it: a High Court has held that notices issued in consequence of a s.148A(d) order fall with the order when it is set aside on natural justice grounds. So the practical value of the win is time, disclosure, and the destruction of whatever the officer has already issued on the back of the order.
Information in the assessee's case for the relevant assessment year in accordance with the risk management strategy formulated by the Board is the first item on the statutory list of what counts as information suggesting escapement, so the argument that a portal flag cannot be information will not work. A High Court has held that the risk management strategy is merely a phrase for an evolving departmental strategy covering all the sources from which information may be collated, and that no limitation should be placed on it. The line that does work is the one between a label and the underlying data. A High Court has held that classifying a fact already on the record as information may let the officer issue a s.148A(b) notice but does not let him issue the s.148 notice, and quashed the order and notice and remanded for a fresh reasoned order. Another has held that where the portal statement is contradicted by the Department's own record the statutory trigger is simply absent. So ask for the source, the reporting entity, the appraisal report and the transaction data by name, and never for the classification.
The section as it stood when this notice issued required the officer to provide an opportunity of being heard by serving a show-cause notice specifying a period, being not less than seven days and not exceeding thirty days from the date the notice is issued, or such further period as may be allowed on an application. The ground here is not that seven days is short in the abstract; it is that seven days measured from a notice that enclosed nothing is not an opportunity at all, and that the period can only run from the day the material is supplied. That is reasoning from the wording of the section read with the duty to supply the material, not a holding. This collection contains no entry that rules on the minimum period or on when it starts to run, so plead the statutory words and rest the substance on the supply decisions rather than on any authority about time.
These are the two answers the Department will give and they are both good against the assessee. A Division Bench has read the words if required in the enquiry clause as conferring a discretion, so the absence of a prior enquiry does not by itself vitiate the notice. And a High Court, in a decision marked good law, has held that the section does not oblige the officer to deal with objections point-wise or to record detailed reasons, because the old requirement of recording a reason to believe was replaced by a lighter, more subjective standard, and refused to quash on that ground alone. Knowing both before drafting keeps the petition off the two grounds that will be answered in a paragraph, and keeps the Court on the one ground that has documentary support.
Prior approval of the specified authority is a condition for issuing a notice under s.148 and for the show-cause stage, and the order here recites approval without naming who gave it. Two propositions in this collection are safe. The Supreme Court has held that an approval recorded as a bare statement of satisfaction is mechanical and shows no sign that the officer's reasons were examined, and the notices built on it were unsustainable. A High Court has held that the mere appending of the word approved says nothing, that elaborate reasons are not needed but satisfaction must be recorded, even in the briefest form. The proposition that the rank differs with the age of the year is carried in this library by a decision marked overruled, so it cannot be relied on as it stands. What the library does say is that since 1 September 2024 the specified authority is the Additional or Joint Commissioner or Director, and a Constitution-level decision on the transitional notices holds that the relaxation statute extended the sanction time limit but nothing else, leaving every other defence alive.
Limitation is a hard outer boundary on the power, not a procedural nicety; a notice issued after the period expires is issued without jurisdiction and everything built on it falls. Which version of s.149 governs turns on the date of the notice, and the content of the fifty lakh test differs between them: up to 31 August 2024 the escaped income had to be represented in the form of an asset, expenditure in respect of a transaction or in relation to an event or occasion, or an entry in the books. A High Court has held that where the escaped income is below Rs 50 lakh only the three-year clause applies and quashed the s.148A(d) orders and the consequent notices. The figure alleged here is Rs 1,84,00,000 and is said to be unsecured loans, so the limb is likely satisfied; the point to test is whether the figure survives once the repayments are deducted and whether the officer has aggregated years to reach it.
The argument that only a faceless assessing officer could issue the notice is no longer worth the paragraph. The Supreme Court in April 2026 set aside the High Court judgments that had quashed notices issued by jurisdictional officers, because a provision inserted by the Finance Act 2026 with effect from 1 April 2021 now defines the assessing officer for these sections as an officer other than the faceless centre and its units. One of the High Court decisions on the assessee's side is marked partly overruled in this library, another High Court had already held the two have concurrent jurisdiction, and a High Court has since refused leave to amend a petition to take the new point. On the choice of forum, the Supreme Court has held that the Act supplies a complete machinery and an assessee cannot ordinarily abandon it for a writ, with narrow exceptions that have to be pleaded; but it has separately disapproved the blanket proposition that a writ against a reassessment notice is not maintainable because an alternative remedy exists. The petition here is maintainable on the non-supply ground precisely because it is an exception that has been pleaded, and it should be confined to that.
The commonest outcome where the material demonstrably arrived only with the order is a set-aside and a remand to the show-cause stage, with a direction to supply the material and give a fresh opportunity. That is a win on paper and a delay in substance: the officer serves the appraisal report, the company replies again, and a fresh order and notice issue within weeks. A smaller share end with the reopening dropped, and almost all of those are cases where the information was contradicted by the Department's own record rather than merely unsupplied. A third pattern, common where the petition is filed late or argued on reasoning rather than on supply, is dismissal with liberty to raise the same grounds in the assessment and the appeal. The company's real protection in all three is the 2020 assessment in which the same loan accounts were produced, and that belongs on the record at every stage.
