Section 148A order passed without providing requested materials violates natural justice and warrants fresh adjudication.

The Petitioner, an SME-listed public company, filed its return of income for Assessment Year (A.Y.) 2019-20 on 26.09.2019.

The Respondent issued an inquiry notice under Section 148A(a) of the Income-tax Act on 25.03.2023, followed by a show-cause notice under Section 148A(b) on 31.03.2023, alleging escaped income related to deposits of ₹2,81,04,374 in State Bank of India.

Although the notice under Section 148A(b) mentioned certain attachments, the Petitioner claimed they were not received and requested specific details via a letter dated 11.04.2023 to facilitate a proper response.

Without providing the requested documents or an opportunity for a hearing, the Respondent passed the assessment order under Section 148A(d) and issued a notice under Section 148 on 17.04.2023.

1. Whether the assessment order passed under Section 148A(d) and the consequential notice under Section 148 were legally sustainable when the requested supporting material was not provided to the assessee.

2. Whether the failure to grant a hearing and consider the petitioner’s request for information constitutes a gross violation of the principles of natural justice.

The court primarily applied Section 148 and Section 148A of the Income-tax Act, 1961, which outline the procedure for reassessment and mandate a preliminary inquiry and an opportunity for the assessee to be heard before reopening an assessment.

The court further relied on the fundamental Principles of Natural Justice (Audi Alteram Partem), which require that an individual be provided with the material evidence used against them and a fair opportunity to respond before an adverse order is passed.

The court observed that the Petitioner had explicitly requested the break-up and categorical details of the alleged bank deposits to answer the show-cause notice effectively, given the large volume of its business.

During the proceedings, the Revenue’s counsel conceded that the specific details requested by the Petitioner had indeed not been provided.

The court reasoned that proceeding to pass a final order under Section 148A(d) without supplying the underlying material or granting a hearing was a "clear breach of principles of natural justice and dehors the settled principles of law".

It held that the statutory process under Section 148A cannot be a mere formality and must involve the meaningful participation of the assessee based on full disclosure of information.

The matter was remanded to the Assessing Officer to pass a fresh de novo order in accordance with the law.

The Respondent was directed to provide the requisite material to the Petitioner, allow the filing of a supplementary reply, and grant an opportunity for a personal hearing within 12 weeks from the receipt of the order.