An assessee must receive the underlying computation and material before an adverse Section 148A determination.

The petitioner challenged an order under Section 148A(3), the related prior approval, and a notice under Section 148 of the Income Tax Act, 1961, concerning assessment year 2020–21.

The proceedings began with a notice dated 30 March 2026 alleging that business turnover of ₹90,18,800 was not disclosed in the petitioner’s return; the notice was issued a day before the limitation period under Section 149(1)(b) expired.

In her reply, the petitioner disputed treating the difference between bank credits and turnover as undisclosed turnover, explaining that not every bank credit represented turnover.

The subsequent order raised additional concerns—including the petitioner’s business interests, alleged parking and rotation of funds, expenses, and unsecured loans—which had not been included in the show-cause notice.

The High Court also noted an inconsistency in the recorded date of approval, but proceeded to consider the adequacy of notice and opportunity.

Sections 148A(1) and 148A(3) of the Income Tax Act, 1961, govern the notice and pre-assessment determination of whether it is a fit case to issue a reassessment notice; Sections 147 and 148 concern reassessment proceedings and the notice commencing them; Section 149(1)(b) prescribes the applicable limitation; and Section 151 provides for prior approval.

The Court applied the procedural-fairness principle that a taxpayer must be given notice of the material propositions and information relied upon, together with a reasonable opportunity to respond, before those matters are used to support further reassessment proceedings.

No judicial precedent was cited.

The initial notice alleged undisclosed turnover of ₹90,18,800, but the petitioner’s response specifically disputed the treatment of bank credits as turnover and offered to provide further details if the computation and its basis were disclosed.

The Revenue did not provide that computation.

Further, the Section 148A(3) order relied on additional allegations concerning the petitioner’s firms, funds, expenses, and loans without first putting those matters to her.

The Court considered that proceeding on these undisclosed matters, without the underlying information, risked turning reassessment into a roving inquiry rather than an inquiry on defined issues.

It therefore found that the petitioner required disclosure and a meaningful opportunity to respond before the matter could be reconsidered.

The Court quashed the Section 148A(3) order, the prior approval, and the Section 148 notice, restoring the proceedings to the second respondent for due consideration.

On service of the order, the second respondent was directed to furnish the computation of ₹90,18,800 and the information underlying it, and to allow the petitioner a reasonable opportunity to respond.

The Court also directed that future requests for prior approval under Sections 148A(3) and 151 be considered after examining all relevant material, while leaving all contentions open.