Reassessment cannot rest on the false premise that disclosed Bitcoin transactions were omitted.

For Assessment Year 2018–19, the petitioner filed a return reporting income from Bitcoin trading through Zebpay.

The Revenue issued a notice under Section 148A(b), alleging that Bitcoin sales of ₹4,94,09,000 were not disclosed.

The petitioner replied with transaction details and supporting documents, but the Assessing Officer passed an order under Section 148A(d) and issued a notice under Section 148 on the ground that the transactions and related income had not been properly reported.

The petitioner challenged both actions, contending that the return disclosed the Bitcoin transactions and that the return form had no specific head for cryptocurrency income.

1. Whether the order under Section 148A(d) and notice under Section 148 could stand when they proceeded on the premise that the petitioner had not disclosed Bitcoin transactions of ₹4,94,09,000 in the return

2. Whether the petitioner’s return and supporting material disclosed the relevant Bitcoin transactions and income, such that the stated basis for reopening was factually incorrect

The Court considered Sections 148A(d) and 148 of the Income Tax Act, 1961, governing the Assessing Officer’s determination on whether it is a fit case to issue a notice under Section 148 and the subsequent reassessment notice.

The judgment applied the principle that such action cannot stand where its stated factual premise—that the relevant transactions were not disclosed—is contradicted by the return and supporting documents.

The Court examined the return, the petitioner’s reply, and the reconciliation of Bitcoin transactions placed on record.

Those materials showed that the return disclosed sales, purchases, opening and closing stock, and net income from cryptocurrency trading; the petitioner had also explained that the return form lacked a specific cryptocurrency-income head.

The Revenue’s counsel did not dispute the reconciliation.

Because the impugned order and notice rested on the contrary premise that the transactions had not been disclosed, the Court found their factual basis untenable.

It set aside the notice dated 8 April 2022 under Section 148 and the order of the same date under Section 148A(d), allowed the petition, and made the rule absolute.