In a recent decision, the Calcutta High Court clarified that an order under Section 148A(d) of the Income Tax Act, 1961 does not constitute a final assessment order, thereby negating any income tax demand. The petitioner, Rachna Singhi, challenged the disputed order related to the assessment year 2019-20, arguing against the reasoning provided by the respondent/Income Tax Officer.

Section 148A of the Income Tax Act, 1961 empowers the Assessing Officer (AO) to issue a notice to individuals who fail to furnish income returns, reports, or financial transaction statements. Introduced by the Finance Act, 2021, this provision took effect from April 1, 2021. Following the taxpayer’s response and further inquiry, the AO must issue an order under Section 148A(d) of the Income Tax Act, declaring a case for reassessment of a specific sum that evaded assessment.

A Single Bench of the High Court, presided over by Justice Md. Nizamuddin, emphasized that the sufficiency or reasonableness of the grounds in an order under Section 148A(d) cannot be examined by the writ court, as the petitioner had already been given an opportunity to present objections, which the Assessing Officer had duly considered, albeit reaching a different conclusion.

The Court additionally stated that the petitioner still has ample opportunity in subsequent proceedings, following the notice under Section 148 of the Income Tax Act, to build a case if she possesses supporting evidence. Ultimately, the order issued under Section 148A(d) of the Income Tax Act does not constitute a final assessment order, nor does it give rise to any tax demands.

~Navneet Shukla