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Non-sharing of all the relevant details and documents related to escapement of income & validity of section 148 notice
The issue was related to section 69C read with section 148, of the Income-tax Act, 1961.
– An information was collected/received by the Assessing Officer that during the course of the search conducted upon ‘W’ group it was found that the assessee-individual had entered into significant high risk financial transaction with ‘W’ group.
– On basis of the same, a reopening notice was issued upon assessee for treatment of the amount as unexplained expenditure (Loan) in the hands of the Assessee.
– Assessee had filed an elaborate objection in reply to said notice along with a specific request seeking relevant details and documents related to escapement of income.
– However, the Assessing Officer disposed of such objections on ground that there was no legal requirement to share entire material collected during the course of search in case of ‘W’ group with the assessee at stage of reopening.
– Thereafter, assessment proceedings were concluded.
– It was noted that the Assessing Officer had reopened and concluded reopening proceedings solely on the basis of information obtained from Jt. Commissioner which admittedly was a third party information collected in case of ‘W’ group.
– This information was not disclosed to the assessee.
– Further, assessee was also not given opportunity of cross-examination of concerned person who was stated by Assessing Officer to have given a statement against assessee
– The issue before Court was whether non-furnishing of relevant information to assessee would render reopening proceedings in violation of principles of natural justice and, thus, same was to be quashed and matter was to be remanded back to Assessing Officer to take a fresh decision after furnishing all details and documents sought for by assessee?
The court answered it in affirmative and against the department.
The case details is as under:
Sarwan Kumar Poddar
 142 taxmann.com 34 (Calcutta)
Where Assessing Officer issued reopening notice upon assessee solely on basis of an information collected during search conducted in case of a group of companies that assessee had entered into high risk financial transactions with said group, since such information concerning assessee was not furnished or disclosed to him and assessee was also not given opportunity of cross-examination of a person who was stated by Assessing Officer to have given a statement against assessee, there was a gross violation of principles of natural justice and, thus, impugned reopening notice issued against assessee same was to be set aside