Section 148A orders cannot rest on undisclosed grounds or material without affording an opportunity.

The petitioner challenged the order under Section 148A(3), the prior approval under Sections 148A(3) and 151, and the consequential notice, concerning assessment year 2022–23.

The proceedings began with a notice dated 27 March 2026 alleging that business turnover of ₹2,06,513 had not been disclosed; the notice was issued four days before the limitation date under Section 149(1)(b).

The petitioner replied that the alleged amount arose from a difference between turnover and bank credits, and that bank credits could not all be treated as turnover. She also offered to provide further details if the basis of the computation were disclosed.

The Court noted that the approval document referred to 27 March 2026, although the order recorded the approval date as 12 June 2026—after the petitioner’s reply.

The order also contained observations about the petitioner’s firms, fund movements, expenses, and unsecured loans that had not been raised in the show-cause notice.

1. Whether the order under Section 148A(3) and consequential notice could stand when the petitioner had not been given the computation and supporting information underlying the alleged undisclosed turnover of ₹2,06,513.

2. Whether the Assessing Officer could rely in the Section 148A(3) order on adverse propositions not put to the petitioner in the show-cause notice.

3. Whether the approval and reassessment proceedings should be quashed entirely or restored for reconsideration after affording the petitioner an opportunity to respond.

Sections 148A(1) and 148A(3) of the Income Tax Act, 1961 govern the notice and the decision whether a case is fit for reassessment; Sections 149(1)(b) and 151 concern, respectively, the applicable limitation and prior approval.

The Court applied the procedural requirement that a taxpayer must be given notice of the material propositions relied upon and a reasonable opportunity to respond before an order under Section 148A(3) leads to reassessment proceedings under Section 147.

Although the initial notice identified the alleged turnover discrepancy, the petitioner disputed the calculation and expressly sought the information needed to explain it. The respondents did not provide the computation or respond to that request.

The Section 148A(3) order also relied on matters—including alleged fund parking and rotation through firms, substantial expenses, and unsecured loans at minimal interest—that were outside the show-cause notice.

Without the computation and supporting material, and without notice of those additional propositions, the petitioner could not meaningfully respond; the resulting proceedings risked becoming a roving enquiry rather than an enquiry on defined issues.

The Court therefore quashed the impugned steps but restored the matter for due consideration, rather than terminating the proceedings.

The Court quashed the Section 148A(3) order, the prior approval under Sections 148A(3) and 151, and the consequential notice, restoring the proceedings to the second respondent.

Upon receiving the Court’s order, the second respondent must furnish the computation of ₹2,06,513 and the information underlying it, and allow the petitioner a reasonable opportunity to respond in light of that material and the observations in the impugned order.

The first respondent was directed, when considering any report for prior approval, to examine all relevant material before granting approval; all contentions were left open.