Pranav Ramesh Pariikh Vs DCIT (Gujarat High Court)
Gujarat High Court held that reopening of assessment under section 148 of the Income Tax Act is quashed and set aside since the information provided in the notice is ambiguous and does not establish any live link with evidence that income of assessee has escaped assessment.
Facts- By this petition under Articles 226 and 227 of the Constitution of India, the petitioner has challenged the notice dated 10/03/2022 issued under Section 148A(b) of the Income Tax Act, 1961 and the order dated 06/04/2022 passed under Section 148A(d) of the Act and the notice issued under Section 148 of the Act of the even date.
Conclusion- Hon’ble Bombay High Court in case of Karan Maheshwari has held that it is settled law that the reasons for the formation of the belief that there has been escapement of income must have a rational connection with or relevant bearing on the information. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income Tax Officer and his view that there has been escapement of income of the assessee from assessment in the particular year. It is settled law that it is not any and every material, howsoever vague and indefinite or distant, remote and far-fetched which would suggest escapement of the income of the assessee from assessment. The powers of the Income Tax Officer to reopen assessment, though wide, are not plenary. The Act, no doubt, contemplates the reopening of the assessment if grounds exist for believing that income of the assessee has escaped assessment. The live link or close nexus should be there between the information before the Income Tax Officer and the belief which he has to prima facie form an opinion regarding the escapement of the income of the assessee.
