The Income Tax Department’s Central Range-1, Ahmedabad, has issued directions under Section 144A of the Income Tax Act, 1961, requiring the Assessing Officer to thoroughly examine the evidence, consider the taxpayer’s submissions and provide a reasonable opportunity of hearing before completing a block assessment involving proposed additions of approximately ₹17.32 crore.
The directions, dated September 29, 2026, were issued by Bhola Ram Dewasi in the case of Jashesh Bhaveshkumar Bhatt for the block period from April 1, 2019, to September 23, 2025. They require the Assessing Officer to independently examine the facts and evidence and pass a speaking order in accordance with law.
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The supervisory directions followed an application filed by the taxpayer on September 28, 2026, challenging the basis of the proposed additions and alleging procedural irregularities in the ongoing assessment proceedings. Although the taxpayer sought the withdrawal of the additions, the directions do not delete them or conclusively decide their legality. Instead, they prescribe safeguards for the completion of the assessment.
In his application, Bhatt sought intervention in the pending block assessment proceedings under Section 158BC. He stated that the proposed additions totalled ₹17,32,27,989 and questioned whether the material relied upon by the Assessing Officer could support an assessment of undisclosed income for the block period.
According to the application, the proposed additions comprised ₹2,81,00,200 relating to an alleged unexplained receipt associated with Karmaputra Charitable Trust and ₹14,51,27,789 relating to an alleged unexplained receipt described as connected with “Satta Kalyan Party.” The application identified both proposed additions as being under Section 69A.
The taxpayer contended that the first addition was based exclusively on a screenshot of the trust’s Form 10B audit report, in which the auditor had mentioned his PAN. He alleged that the second addition arose from a brief observation in an assessment order passed by the National Faceless Assessment Centre under Section 143(3) for assessment year 2023–24.
These descriptions of the evidence and the objections to its use form part of the taxpayer’s application. The supervisory authority did not adopt them as established findings.
The application also alleged that the Assessing Officer had issued three show-cause notices on September 3, September 16 and September 17, 2026, concerning an alleged transaction of approximately ₹2.81 crore, while shifting the proposed statutory basis between Sections 68, 69 and 69A.
The taxpayer stated that he lodged a grievance with the Principal Chief Commissioner of Income Tax, Gujarat, under the Taxpayers’ Charter on September 19, 2026. He alleged that a fourth show-cause notice, issued on September 26, 2026, subsequently increased the proposed additions to approximately ₹17.32 crore.
While the application characterised the escalation as retaliatory, the directions issued under Section 144A contain no finding that the Assessing Officer acted with retaliation or mala fide intent.
A central contention in the application was that the proposed additions lacked a sufficient connection with evidence found during the search.
The taxpayer asserted that the search conducted at his premises on September 23, 2025, recorded “nil” seizure and a physical cash finding of ₹1,800. He argued that the third-party audit report and the observations in an earlier assessment order did not constitute evidence found as a result of the search at his premises.
The application referred to Section 158BB and invoked the Supreme Court’s decision in PCIT v. Abhisar Buildwell in support of its argument. However, the supervisory directions did not adjudicate the applicability of that judgment to the pending proceedings or determine whether the disputed material satisfied the requirements for the proposed additions.
Addressing the taxpayer’s concerns, the authority directed the Assessing Officer to thoroughly examine the case records, the appraisal report and the corroborative evidence available on record.
The directions require the appraisal report and other material to be carefully examined and properly substantiated with reliable evidence before being used to finalise the assessment.
This places an express obligation on the Assessing Officer to assess the evidentiary basis of the proposed additions. The directions do not declare the appraisal report inadmissible or exclude any particular document; they require scrutiny and substantiation before reliance is placed on the material.
The authority also directed strict adherence to the principles of natural justice throughout the assessment process.
The taxpayer must be informed of the specific issues or discrepancies under examination so that he can prepare a comprehensive response. The Assessing Officer must thoroughly review the documents, evidence and explanations submitted in support of his position.
Where a hearing is requested, the directions require it to be scheduled at a time convenient to the taxpayer, with the date and time communicated sufficiently in advance to allow preparation. During the hearing, the taxpayer must have an opportunity to present his case, respond to queries and clarify disputed points.
The authority emphasised that the assessment must be fair and transparent, respect the taxpayer’s rights and comply with the applicable provisions and rules.
The concluding directions state that the Assessing Officer must independently examine the facts and evidence and pass a speaking order in accordance with law.
The taxpayer had sought directions to immediately drop the proposed additions and keep the final assessment in abeyance until his application was disposed of. The September 29 communication does not expressly grant either relief. It instead directs the Assessing Officer to complete the block assessment through a fair process, supported by an examination of the evidence and the taxpayer’s explanations.
The document therefore records supervisory intervention in a pending assessment involving proposed additions of ₹17.32 crore. It does not record a final tax demand, cancellation of the additions or a judicial ruling on their validity.
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