Notice U/S 148 Of Income Tax Act Can't Be Issued Without Giving Proper Reasons: Himachal Pradesh High Court

Himachal Pradesh High Court held that a notice under Section 148 of Income Tax 1961 for initiation of reassessment proceedings, can't be issued by the assessing officer without giving proper reasons.

“Section 148 enables the Assessing Officer to initiate reassessment proceedings where income chargeable to tax is believed to have escaped assessment”. 

Justice Tarlok Singh Chauhan & Justice Sushil Kukreja : “The Assessing Officer needs to realise that notice under Section 148 does have serious civil or evil consequences and cannot be passed so lightly and reasons for the same have to be recorded in the order itself.”

Background Facts:

The petitioner, Neena Singh Thakur, was served with a show cause notice under Section 148A(d) of the Income Tax Act, 1961, alleging that she had escaped assessment for the Assessment Year 2017–18.

According to the Income Tax Department, the petitioner did not disclose the information about a immovable property which he had purchased and the value of which was ₹1.21 crores. This was confirmed from the TDS Returns filed by the Petitioner.

Responding to the allegations, the petitioner submitted a reply along with all the required documents. She clarified that she had disclosed all the necessary transactions and the value of the property was ₹1,31,63,935 and not ₹1.21 crores.

Even after the petitioner filed the reply, the Assessing Officer issued notice under Section 148 of the Income Tax Act and stated that the case is at a preliminary stage. He also stated that the contentions of the petitioner are not acceptable as they require detailed examination.

Aggrieved by the issuing of notice, the petitioner filed a writ petition before the High Court seeking quashing of the notice issued by the Income Tax Department.

Findings:

The Court observed that there is no legal requirement that mandates every inquiry under Section 148A to lead to the issuance of notice under Section 148. Rather, it is the duty of the Assessing Officer to consider the material on record, including the assessee's reply, to determine whether or not a notice should be issued.

The Court further held that the Assessing Officer can't avoid it's responsibility by merely stating that “at the preliminary stage, the contention of the assessee is not acceptable and requires detailed examination.” It emphasized that a notice under Section 148 carries serious civil consequences and therefore can't be issued without giving proper reasons for initiating reassessment proceedings.

In S.N. Mukherjee V Union of India, 1990, the Supreme Court held that giving proper reasons is necessary as it:

 guarantees consideration by the authority

 introduces clarity at decisions

 minimize chances of arbitrariness in decision making

Therefore, the Court remarked that failure to provide reasons amounts to a denial of proper justice. If an order lacks clear reasoning, it becomes it difficult for the courts to perform its function. Right to reason is an indispensable part of a sound judicial system.

In Pankaj Garg vs. Meenu Garg & Anr. (2013) Supreme Court held that “an order which does not contained any reason, is no order in the eyes of law.”

Thus, the Court set aside the order passed by the assessing officer stating that it lacked proper reasoning and remanded the matter back to be assessed again in accordance with law. The court stated that if the Assessing Officer still believes that issuance of a notice under Section 148 is necessary then he must record detailed reasons.

Case Name: Neena Singh Thakur v/s Pr. Commissioner of Income Tax & Anr.

Case No.: CWP No. 3681 of 2024

Date of Decision: 14.05.2025

For the Petitioner: Mr. Vishal Mohan, Sr. Advocate with Mr. Praveen Sharma and Mr. Abhinav Bazwaria, Advocates.For the Respondents: Mr. Neeraj Sharma, Advocate.

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