The Gujarat High Court held that information on the Income Tax Department’s Insight portal could not, by itself, justify reopening an assessment without material linking the alleged transaction to the taxpayer.
The bench of Justice A.S. Supehia and Justice Vaibhavi D. Nanavati has quashed a reassessment notice issued to the assessee for Assessment Year 2019–20. The Income Tax Department alleged that ₹2,14,42,208 had escaped assessment in connection with transactions involving an angadiya. The court found that the notice and the subsequent order did not identify any transaction connecting that amount to the company.
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The appellant/assessee challenged a notice dated June 29, 2025, issued under Section 148 of the Income Tax Act, 1961, along with an order of the same date under Section 148A(3). The proposed reopening concerned Assessment Year 2019–20.
According to the company, the department’s allegation was based on information about transactions involving angadiya Nilesh Pranjivan Bhatia. It argued that neither the notice nor the order explained how the alleged ₹2,14,42,208 transaction related to its business. The company also said that it had sought the supporting material, but the Assessing Officer had not supplied it.
The company drew the court’s attention to similar proceedings involving other ceramic businesses. It submitted that 52 alleged beneficiaries had been identified and that multiple taxpayers had received notices referring to the same amount of ₹2,14,42,208, without an individual calculation linking the figure to each taxpayer.
The Income Tax Department opposed the petition. Its counsel argued that information received through the Insight portal, along with a statement recorded from Bhatia, indicated transactions aggregating to ₹2,14,42,208. The department maintained that the company should face the assessment proceedings rather than have the reopening stopped at this stage.
The bench examined the earlier notice issued under Section 148A(1) on March 30, 2025. It found no material in that notice linking assessee to a transaction of ₹2,14,42,208 with the angadiya.
The court also observed that, among other petitions listed with this case, 15 taxpayers were attributed the identical alleged escaped-income figure. It noted the company’s unrebutted statement that another Assessing Officer handling other ceramic businesses in Morbi had not reopened cases without an exact amount that could be correlated to each taxpayer.
Although the Section 148A(3) order reproduced the company’s reply and referred to a chart of alleged beneficiaries, the court found that the chart did not state the transaction amount attributable to the assessee. The Assessing Officer had neither supplied material establishing the company’s alleged transaction nor shown any effort to verify the Insight portal information, the bench said.
The court held that an Assessing Officer cannot undertake a “roving and fishing inquiry” merely because information on the Insight portal suggests that taxable income may have escaped assessment. The notice and order must show an application of mind to material connecting the allegation to the taxpayer concerned.
The High Court set aside both the Section 148 reassessment notice and the Section 148A(3) order, each dated June 29, 2025. The ruling addresses the validity of this reopening; it does not determine the company’s taxable income for the assessment year.
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