Reassessment cannot be initiated without reasoned consideration of the assessee’s response and supporting documents.

The petitioner challenged the order dated 16 June 2026 under Section 148A(3) of the Income Tax Act, 1961, the notice under Section 148, and a subsequent notice under Section 142(1), concerning assessment year 2020–21.

After receiving a show-cause notice under Section 148A(1), the petitioner explained that bank credits of ₹60,05,132 were not undisclosed business turnover but included contra entries, advances towards LPG sales, loans and advances, receipts from partnership firms, reversals and similar transactions, and referred to its bank statements.

The Assessing Officer found the explanation unsatisfactory, citing the absence of supporting documentary evidence or a reconciliation statement, and concluded that income had escaped assessment.

The petitioner also alleged that the approval was pre-dated; the respondents stated that it was digitally signed on 12 June 2026.

1. Whether the order under Section 148A(3) and consequential notice under Section 148 could stand when the Assessing Officer had not adequately examined the petitioner’s explanation and supporting material concerning the bank credits.

2. Whether the alleged pre-dating of the approval warranted setting aside the reassessment proceedings.

Sections 147, 148 and 148A of the Income Tax Act, 1961 govern reassessment and require the authority, before issuing a notice under Section 148, to consider the assessee’s response to the show-cause notice under Section 148A(1) and determine under Section 148A(3) whether the case is fit for reassessment, giving cogent reasons.

Section 142(1) concerns the subsequent assessment inquiry.

The Court applied the principle that the statutory decision to initiate reassessment must reflect meaningful consideration of the assessee’s explanation and relevant material; it cited no precedent.

The petitioner had identified specific categories of transactions and referred to its bank statements, but the Assessing Officer rejected the explanation principally because supporting evidence or a reconciliation statement had not been provided.

The Court held that, before concluding the case was fit for a Section 148 notice, the Assessing Officer should have examined the documents to determine whether the credits could properly be classified as business turnover and provided cogent reasons for the reassessment decision.

The Court also observed that the approval process should address the circumstances giving rise to the pre-determination allegation, including any possible technical glitch, but did not set aside the proceedings on that ground alone.

The matter was restored to the second respondent for reconsideration. The petitioner was directed to appear before that respondent on 30 October 2026, without further notice, and the respondent was required to consider the petitioner’s explanation in light of the Court’s observations.