Income Tax: HC Quashes Reopening Based on Insight Portal & Form 15CA/15CB Data

The petitioner had filed its income tax return on 18.10.2017 declaring an income of Rs. 61,35,36,200/- for Assessment Year [AY] 2017-18. Thereafter, on 26.03.2019, the petitioner filed a revised income tax return declaring an income of Rs. 61,10,86,200/- for AY 2017-18.

The return was picked up for scrutiny and the Assessing Officer [AO] completed the assessment for AY 2017-18 and passed an order dated 22.11.2019 under Section 143(3) of the Act.

The AO initiated proceedings for reopening of the assessment by issuing a notice under Section 148A(b) of the Act on 26.03.2024. According to the AO, the information received from Jammu and Kashmir Bank, suggested that the petitioner’s income for AY 2017-18 had escaped assessment. It was indicated that on 11.05.2019, a survey under Section 133A of the Act was conducted by the Income Tax Department at the Headquarters of Jammu and Kashmir Bank [J & K Bank], M.A Road, Srinagar. During the course of the survey, information relating to inward and outward remittances was collected. It was reported that the petitioner had made foreign remittances amounting to Rs. 6,50,84,454/- during AY 2017-18. The AO observed that the amounts reflected in the remittances data did not tally with the amounts reflected in the bank statement of the petitioner. This, according to the AO, suggested that the petitioner’s income amounting to Rs. 6,50,84,454/- had escaped assessment for AY 2017-18.

The petitioner responded to the said notice on 02.04.2024 raising various objections including disputing the quantum of alleged remittances. The petitioner had also obtained a confirmation from the J&K Bank which indicated that the information regarding the remittances alleged in the notice issued under Section 148A(b) of the Act did not pertain to the petitioner. The petitioner also forwarded a copy of the said confirmation received from the J&K Bank along with its reply.

Notwithstanding the petitioner’s response that the information received did not pertain to it, the AO has passed the impugned order dated 08.04.2024 holding that it was a fit case for issuance of a notice under Section 148 of the Act. The AO concluded that inward and outward foreign remittance transactions amounting to Rs. 11,37,67,029/- remain unexplained.

High Court’s Decision

High Court noted that the notice dated 26.03.2024 issued under Section 148A(b) of the Act did not contain any allegation regarding income amounting to Rs. 11,37,67,029/- escaping assessment. The only information which, according to the AO, suggested that the petitioner’s income for AY 2017-18 has escaped assessment was information to the effect that the Assessee had made foreign remittances amounting to Rs. 6,50,84,454/-. It is apparent that the impugned order has thus, travelled beyond the scope of the notice under Section 148A(b) of the Act.

Setting aside the impugned order, the court clarified that in the event AO finds any credible information which suggests that the petitioner’s income has escaped assessment for the relevant assessment year, he is not precluded from issuing a fresh notice albeit in accordance with law.