Whether information shared by GST with the IT authorities can be reason for re-assessment?

 

Issue:

Can the information shared by the GST department be a sufficient ground to reopen income tax cases?

The Bombay High Court, in the case of C. C. Dangi & Associates v. Union of India (170 taxmann 541) addressed the issue of whether information shared by GST authorities can serve as a justifiable ground for reopening an income tax assessment under Section 148 of the Income Tax Act.

Key observations of Hon Bombay HC:

1. Distinct Jurisdictions: The court emphasized that the Income Tax Act and the Central Goods and Services Tax (CGST) Act operate in separate domains, each with its own taxation schemes. Consequently, there is no inherent overlap or intermixing of their jurisdictions.

2. Requirement of tangible evidence: The Assessing Officer (AO) must possess tangible material indicating that specific transactions relevant to CGST are also pertinent to the assessee’s income tax returns. This is particularly crucial if such transactions suggest that the assessee has not disclosed true and correct income.

3. Independent Application of Mind: The AO must apply their own mind to the information received and cannot act solely based on inputs from other agencies.