Ojaswini Retailers Private Limited & Anr. Vs Union of India & Ors. (Calcutta High Court)
The Calcutta High Court quashed the reassessment order passed under Section 148A(3) and the consequential notice issued under Section 148 for AY 2019-20, holding that the Assessing Officer failed to adequately consider the assessee’s replies and supporting documents before concluding that income had escaped assessment. The Court observed that although the petitioners had furnished explanations and banking records in response to the show cause notice, the impugned order dealt only with partial bank statements and ignored the explanations offered regarding the transactions. Mere same-day routing of funds through banking channels, without analysing the commercial rationale and materials produced by the assessee, could not justify the formation of belief that the transactions were accommodation entries. Finding the order perverse and contrary to the mandate of Section 148A, the Court directed the Assessing Officer to conduct a fresh examination after granting an effective hearing and passing a reasoned order in accordance with law.
Core Issue. The principal issue before the High Court was whether the Assessing Officer validly formed a belief that income had escaped assessment under section 148A(3) without properly considering the assessee’s replies and supporting materials submitted in response to the show-cause notice under section 148A(1), and whether such non-consideration amounted to a violation of the principles of natural justice.
