Case Law Details
Rahul Sachan Vs ITO (Allahabad High Court)
In the case of Rahul Sachan vs. Income Tax Officer (ITO), the Allahabad High Court delved into the intricacies of Section 148A of the Income Tax Act, 1961, particularly concerning the pre-conditions required to initiate reassessment proceedings. The petitioner, Rahul Sachan, challenged an order passed under Section 148A(d) and a consequential notice issued under Section 148 for the Assessment Year 2020-21.
The case stemmed from a show cause notice issued to the petitioner, proposing reassessment proceedings based on information suggesting income escapement. The notice highlighted transactions with a company, M/s Everett Infra and Engineering Equipments Private Limited, flagged under the Risk Management Strategy formulated by the Central Board of Direct Taxes (CBDT). It alleged that M/s Everett Infra was involved in providing accommodation entries and engaging in bogus contracts, implying that the petitioner might be participating in tax evasion schemes.
In response, the petitioner submitted a detailed reply, asserting the genuineness of the transactions based on entries in his books of accounts and the profit and loss account of M/s Everett Infra. However, the Assessing Authority proceeded to pass an order under Section 148A(d), rejecting the petitioner’s objections. The Authority relied on oral statements recorded during unrelated search proceedings and reports from the Inspector of Income Tax, among other factors.
The petitioner contended that the Assessing Authority failed to consider relevant material and objections raised, passing the order in a perfunctory manner. Conversely, the revenue argued that the statutory requirement to record ‘reason to believe’ had been eliminated, and the assessing officer had considered the petitioner’s reply before passing the order.
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