The Gujarat High Court has held that the AO cannot review his own findings from the original assessment under the new reassessment regime.
The bench of Justice Bhargav D. Karia and Justice Pranav Trivedi has observed that the AO had once again issued notice under section 148A on the same crypto-currency transactions already examined in an earlier assessment.
The bench quashed the notice, holding that reassessment cannot be used as a tool for review. Once an issue has been considered, the AO cannot reopen merely to take a “second look.”
Subsequent to filing of the return of income, the respondent initiated reassessment proceedings under Section 147 of the Act by issuing notice under Section 148 of the Act on 30.03.2021, on an information about huge cash deposits made in the Bank accounts of the petitioner.
The information was also received on the insight portal as regards purchase and sale of Crypto Currency. The petitioner in response to notice dated 30.03.2021 filed the return of income on 17.01.2022 declaring total income at Rs.3,20,580/- for the Assessment Year 2016-17.
The AO issued notice under Section 142(1) of the Act asking the petitioner to submit details relating to the transactions in respect of Crypto Currency along with detailed computation of capital gain.
The respondent/AO issued show cause notice dated 28.02.2022 proposing to make additions of Rs.8,77,250/- as short term capital gains on sale of Crypto Currency.
The notices was responded by the petitioner by replies by which it was contended that the Crypto Currency transacted by the petitioner were entered in due course of their business transactions and the transactions were already declared by the petitioner in their business returns.
It is the case of the petitioner that regular assessment was completed and Assessment Order under Section 147 read with Section 144B of the Act was passed on 15.03.2022 for the Assessment Year 2016-17 computing the total income of petitioner at Rs.3,20,580. It is further the case of the petitioner that the respondent once again initiated the assessment proceedings under the new regime under Section 148A of the Act by initially issuing notice under Section 148A(b) of the Act on 30.03.2023 on the same ground relating to Crypto Currency stating that the petitioner had entered into high value transactions in Crypto Currencies during Assessment Year 2016-17 and that the petitioner has not disclosed any profit from Crypto Currency in their return.
The petitioner was asked to submit its reply to the said notice by 10.04.2023. It is the case of the petitioner that she was advised by her Chartered Accountant that since same issue has been examined by the Assessing Officer for the assessment year under consideration, there was no requirement of filing any response.
However, the respondent passed the impugned order under Section 148A(d) of the Act on 13.04.2023 holding that the income to the tune of Rs.59,89,590 had escaped the assessment for the Assessment Year 2016-17 and therefore, the case of the petitioner is fit for the issuance of notice under Section 148 of the Act. Thereafter notice under Section 148 of the Act was issued on 13.04.2023.
The order passed under Section 148A(d) of the Act and the notice issued under Section 148 of the Act are the cornerstone of the challenge in the present writ petition.
The petitioner submitted that the investment and sale of Crypto Currency which is the subject matter of order passed under Section 148A(d) of the Act was also considered by the Assessing Officer while making regular assessment under Section 147 of the Act read with Section 144B of the Act on 15.03.2022. It was therefore submitted that on the very same issue which is already considered by the Assessing Officer, again notice issued under Section 148A(b) of the Act could not have been issued.
Therefore, the order passed under Section 143A(d) of the Act and notice under Section 148 of the Act are absolutely without jurisdiction and patently bad in law.
The court held that the reasons recorded in the notice issued under Section 148A(b) of the Act was already considered by the Assessing Officer in the Assessment Order dated 15.03.2022. The Assessing Officer does not have the power to review his own assessment arrived at during the original assessment. The petitioner had provided all the information which was considered by the respondent.
The court while allowing the petition held that the Assessing Officer cannot initiate reassessment proceedings to have relook with the documents filed in the original assessment proceedings. The power to reexamine cannot be exercised from time to time.
Case Details
Case Title: Urvashi Kanubhai Desai Versus Income Tax Officer
Case No.: R/Special Civil Application No. 8600 Of 2024
Date: 01/09/2025
Counsel For Petitioner: SN DIVATIA
Counsel For Respondent: VARUN K.PATEL
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