ITO Vs O3 Developers Private Limited (Supreme Court of India)
The dispute arose from a notice dated 31.03.2021 issued under section 148 of the Income Tax Act, 1961, seeking to reopen the assessment of a company for Assessment Year (AY) 2017–18. The assessee had originally filed its return on 31.10.2017 declaring total income of ₹58.50 lakh. Subsequently, the company underwent a change of name and was issued a new PAN in April 2019, which later became central to the jurisdictional objection raised against the reopening notice.
The Assessing Officer relied on information available on the Insight Portal, alleging that the assessee had received substantial cash deposits and credit entries amounting to over ₹337 crore, which allegedly did not match its declared income. It was further alleged that the assessee had received accommodation entries from an entity against which search proceedings had been conducted. Based on this information, the Assessing Officer recorded reasons to believe that income chargeable to tax had escaped assessment and issued the reopening notice.
The assessee challenged the notice before the High Court under Article 226, primarily on two grounds. First, it contended that the notice was without jurisdiction, as the officer issuing it did not have authority after the change in the company’s name and PAN, which allegedly shifted jurisdiction to another circle. Second, it argued that the reasons recorded for reopening were vague, based solely on portal information, and lacked any live nexus with the assessee’s books of account or specific transactions, thereby amounting to a fishing or roving inquiry.
