Pashupati Davella Vs National Faceless Assessment Centre (Karnataka High Court)
Mechanical Reopening Fails: Karnataka HC Sets Aside 148A(d) Order for Non-Application of Mind
The Karnataka High Court quashed reassessment proceedings initiated for AY 2016-17, holding that the order passed under section 148A(d) suffered from non-application of mind, as the Assessing Officer failed to consider the assessee’s detailed reply on record.
In this case, the assessee had responded to the section 148A(b) notice explaining that the sum of ₹55.86 lakh represented dividend income and had furnished clarifications in detail. However, while passing the order under section 148A(d), the authority erroneously recorded that the assessee had not substantiated the receipt, and on that basis proceeded to issue a notice under section 148.
The Court, on a prima facie examination, found that the reply filed by the assessee squarely addressed the very issue raised in the show-cause notice, yet the same was not adverted to or discussed. Such an approach was held to be unsustainable, as the explanation on record was either ignored or mechanically rejected.
The Court also noted that the assessee had raised contentions on limitation and absence of tangible material, which too had not been examined. Accordingly, the High Court set aside the order under section 148A(d) and the consequential notice under section 148, and remitted the matter back to the stage of section 148A(b), granting liberty to the assessee to file additional replies. All contentions were kept open.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
