Delhi HC Quashes Notice U/S 148: Rubber-stamp reason given mechanically does not amount to “reasons for the proposed super session”.
Let us study the HC judgement on a writ petition filed by SYNFONIA TRADELINKS PVT LTD ( W.P.(C) 12544/2018):
Short Overview:
1. The assessee filed the income tax return for the assessment years along with the balance sheet. The returns for the Assessment Years were filed via electronic mode.
2. On the last date on which the limitation was to expire, a notice under Section 148 of the Act was issued.
3. The approval for issuance of notice under Section 148 of the Act, and commencement of proceedings under Section 147 of the Act were sought by ACIT, but ACIT had no role to play since the notice was issued after expiry of 4 years from the end of the AY.
4. The order recording reasons neither discusses the contents of the report received from the investigation wing or the relevant statements made.
5. Authorized capital, issued and subscribed paid-up capital and share premium account was wrongly recorded but also an error as gross as that which pertained to its year of commencement of business had crept in the order recording reasons.
The Hon. Delhi HC held that:
1. The expression “reason to believe” is stronger than the word “satisfied”. The order recording reasons should fill this chasm. The material brought to the knowledge of the assessing officer should have nexus with the formation of belief that the taxable income of the assessee escaped assessment.
2. Rubber-stamp reason given mechanically for the super session of each officer does not amount to “reasons for the proposed super session”.
3. While the assessing officer may suspect that the taxable income of the assessee escaped assessment, he could not have formed a belief qua the same based on the material which is, presently, on record.
4. So the impugned notice U/S 148 should be quashed along with the order granting sanction to issue the notice.
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