The scope of inquiry under section 148A(d) is limited to the availability of information indicating that income has escaped assessment. In a particular case, an individual assessee filed his income tax return, declaring purchases of arecanut (supari) from entities ‘K’ and ‘O’. Subsequently, the Assessing Officer issued a notice to the assessee under section 148A(b), accompanied by information suggesting that taxable income had not been properly assessed. The available information indicated that the investigating wing of the Directorate General of Goods and Services Tax Intelligence (DGGI) had informed the income tax authorities that entities ‘K’ and ‘O’ were involved in fraudulent practices, such as claiming input tax credit (ITC) based on fake tax invoices without actually receiving the goods. Furthermore, it was discovered that these entities did not exist at their declared principal place of business, despite the assessee’s claim of purchasing goods from them.
The scope of the inquiry under section 148A(d) is solely dependent on whether there is information suggesting that income has escaped assessment. The correctness of this information is a matter to be examined by the Assessing Authority during the subsequent proceedings for reassessment under section 148. At the current stage of decision-making under section 148A(d), the assessing authority is not expected to definitively determine the merits of the information presented, including the defense put forth by the assessee regarding the accuracy of their books of account and the receipt of goods through e-challans. The focus of the authority is solely on the existence of information suggesting that income chargeable to tax has escaped assessment.
Based on the materials referred to in the order of the assessing authority, it is evident that there is information available to the authorities indicating that income chargeable to tax may have escaped assessment. The formation of opinion by the concerned authority under section 148A(d) cannot be questioned based on the detailed defense presented by the assessee regarding the merits of the information. This includes the demand for cross-examining the seller or obtaining documents related to the information. The authority’s opinion under section 148A(d) is not contingent upon the assessment of the information’s merits, as that will be addressed during the subsequent proceedings under section 148.
In the case of Deepak Kumar Yadav v. PCIT (2023) 151 taxmann.com 376 (All.), the court ruled in favor of the revenue, emphasizing that the scope of inquiry under section 148A(d) is limited to the availability of information suggesting that income has escaped assessment. The court clarified that the assessing authority’s opinion based on this information cannot be challenged based on the detailed defense put forth by the assessee regarding the merits of the information.
