The Rajasthan High Court has ruled that an Assessing Officer (AO) cannot issue a reassessment notice under Section 148A of the Income Tax Act without mentioning the name of the bank where the alleged transactions took place. If the AO fails to provide prima facie evidence linking the bank account to the assessee, the reassessment order is liable to be quashed.
Case Details:
- Court: Rajasthan High Court
- Judgment Date: 19-02-2025
- Bench: Justice Ashutosh Kumar & Justice Avneesh Jhingan
- Citation: [2025] 172 taxmann.com 511 (Rajasthan)
- Counsel Representing the Assessee: Ms. Apeksha Bapna, Parth Vashistha, Rohan Chatter, Shantanu Sharma, Siddharth Ranka
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Key Highlights of the Judgment:
1. Failure to Mention the Bank’s Name
The AO issued a show-cause notice under Section 148A(b), citing substantial credit and debit entries in the assessee’s bank account. However, the notice failed to specify the name of the bank where the transactions were recorded. The absence of this crucial detail rendered the reassessment notice invalid.
2. Lack of Prima Facie Evidence
The assessee responded by stating that they did not hold the bank account in question and even provided proof of closure of an ICICI Bank account. Despite this, the AO proceeded with the reassessment order under Section 148A(d) without any evidence linking the account to the assessee. The court held that the AO must establish at least a prima facie connection before proceeding with reassessment.
3. Procedural Lapse: Ignoring Bank’s Response
After the assessee’s objection, the AO issued a notice to ICICI Bank under Section 133(6). However, without waiting for a reasonable period for the bank’s response, the AO disregarded the assessee’s objection. The court found this procedural lapse unacceptable, reinforcing the importance of due process in reassessment proceedings.
Court’s Verdict:
The High Court ruled in favor of the assessee, quashing the reassessment order. It emphasized that procedural fairness is critical in reassessment cases. The AO’s failure to provide clear evidence and lack of adherence to due process led to the order’s dismissal.
Implications of This Judgment:
- Ensures Transparency: Taxpayers are protected from arbitrary re-assessment notices lacking concrete evidence.
- Strengthens Procedural Safeguards: AOs must follow due diligence, ensuring bank details and supporting evidence are provided before issuing reassessment notices.
- Prevents Harassment: This ruling prevents undue scrutiny based on incomplete or vague information, reinforcing taxpayers’ rights.
This landmark decision upholds the integrity of reassessment procedures under the Income Tax Act, 1961 and sets a precedent for similar cases in the future.
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