Gujarat High Court Quashes Section 148A Reassessment Notice for Non-Disclosure of Material Particulars: Jyoti CNC Automation Ltd. vs ACIT

Overview of the Judgment

The Gujarat High Court, in Jyoti CNC Automation Ltd. Vs ACIT (R/Special Civil Application No. 16806 of 2025), delivered a significant ruling on 07/09/2026, quashing reassessment proceedings initiated against Jyoti CNC Automation Limited for Assessment Year 2019-20. The Court held that a notice under Section 148A(1) of the Income Tax Act, 1961 is legally untenable when it fails to place before the assessee the foundational material and specific particulars upon which the allegation of income escapement is premised. The consequential order under Section 148A(3) and the notice under Section 148 were quashed alongside, and the Revenue's plea for remand was expressly declined.

Background and Factual Matrix

The Assessee's Return and Initial Assessment

Jyoti CNC Automation Limited, a company engaged in the manufacture of CNC machines, filed its original return of income for AY 2019-20 on 30.11.2019, declaring total income of Rs.45,05,86,190/-. This return was processed under Section 143(1) of the Income Tax Act, 1961 on 18.05.2020, with the total income being determined at Rs.45,20,60,740/-.

Prior Reassessment Proceedings

The assessee's case was subsequently reopened for AY 2019-20 when a notice under Section 148 dated 30.03.2023 was issued on the basis of information received from the Investigation Wing. The allegation at that stage was that the assessee was a beneficiary of an accommodation entry of Rs.74,34,409/- received from M/s. GSD Trading and Financial Services Pvt. Ltd. The assessee participated in those proceedings and furnished all requisite details. An assessment order was eventually passed on 16.03.2024 under Section 147 read with Section 143(3) of the Income Tax Act, 1961, determining the total income at Rs.45,98,95,153/-. An appeal against that order was stated to be pending at the time of the present proceedings.

The Second Round — Impugned Notice

Subsequent to the above, a fresh notice dated 30.03.2025 was issued under Section 148A(1) of the Income Tax Act, 1961, alleging escapement of income chargeable to tax amounting to Rs.27,46,30,215/-, broken down as follows:

The notice was accompanied only by screenshots of the Case Related Information Detail from the Insight Portal pertaining to three entities — M/s. Harshvardhan Commercials LLP, M/s. Arco Trading Est LLP, and M/s. Blue Cross Commodities Pvt. Ltd. — without supplying the underlying dissemination reports referenced therein. Critically, entries at Serial Nos. 2 and 3 of the notice were described merely as "Others," with no identification of the counter-parties or the nature of the transactions alleged.

Contentions of the Parties

Submissions on Behalf of the Assessee

The assessee's counsel argued that the notice under Section 148A(1) was legally infirm on multiple grounds: