Biswajit Deb Vs Union of India And 3 Ors (Gauhati High Court)
The Gauhati High Court allowed a writ petition challenging a notice dated 31.03.2021 issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2014-15 and all consequential proceedings. The petitioner had originally filed a return declaring total income of ₹10,00,990 and disclosed exempt long-term capital gains of ₹35,69,484.63. The return was processed under Section 143(1) and was not selected for scrutiny.
The reassessment was initiated on the basis of information received from the departmental Insight portal and an investigation by the Directorate of Income Tax (Investigation), Delhi regarding alleged bogus long-term capital gains and short-term capital losses. The petitioner challenged the reassessment, contending that the reasons recorded lacked any nexus with his actual transactions, that the disclosed long-term capital gain had already been reflected in the original return, and that the Assessing Officer had not undertaken any verification before issuing the notice. The petitioner also objected to the approval granted under Section 151. The Revenue defended the reassessment, contending that information available on the Insight portal constituted material giving rise to a belief that income had escaped assessment.
The High Court examined the recorded reasons and noted that the Assessing Officer himself had recorded that, “due to paucity of time,” transactions could not be identified for each beneficiary before issuance of the notice. The Court held that this demonstrated that the transactions relating to the petitioner had not been verified and that the reassessment proceedings had been initiated without the Assessing Officer arriving at even a prima facie conclusion regarding the genuineness of the transactions. The Court further observed that the reasons indicated a fishing and roving enquiry rather than a belief founded on verified material. It also noted that the Assessing Officer proceeded on the basis that the long-term capital gain had not been offered to tax, although the return disclosed the amount.
